Question

Inter Manufacturing Company manufactures expensive chairs. The following data relates to the month of January 20x1.
	Units
Beginning Work in Process (1-1-x1)	3,000
Added during the month	12,000
Completed and transferred out (CTO)	13,000
Ending Work in Process (31-1-x1)	1,500
	Percentage of Completion
Beginning Work in Process (1-1-x1)	60%
Ending Work in Process (31-1-x1)	40%
Costs added during January
	Total costs
Beginning Work in Process (1-1-x1)	$60,300
Costs added during January	$160,000
	Conversion costs
Beginning Work in Process (1-1-x1)	$5,200
Costs added during January	$52,400
The company uses Weighted Average Process Costing Method and materials are added at the beginning of process.
The inspection point for spoilage units occurs at the end of production process
Spoilage is considered abnormal if it is greater than		4%	of CTO

Normal spoilage in units =

The maximum units allowed for normal spoilage

Total costs charger to finished goods

The cost of normal spoilage =

Total abnormal spoilage costs =

A. 400 B. $220,300 C. 500 D. 520 E. $194,133.05 F. $7465.89 G. $8565.89 H. - 110 I. $201,578.94 J. $20,000 K. 490 L. nothing

Answer 1

1) Normal spoilage in units = TOTAL INPUT - OUTPUT-C WIP=3000+12000-13000-1500=500 UNITS
2) Maximum normal spilage = CTO * % of normal spoilage= 13000*4% = 520 units
	Phy unit	mate	conve	total
o wip	3000	3000	3000
started and completed	10000	10000	10000
Trasfr out	13000
normal spoilage	500
c wip	1500	1500	600
Eq units		14500	13600
Total costs:
o wip		55100	5200
added during Jan		107600	52400
Total costs:		162700	57600
cost per Eq unit		11.22	4.24
3)cost of finished goods	=13000*(11.22+4.24)			=$200980
4)cost of normal spoilage= 500*(11.22+4.24)				=$7730
5) Total cost of abnormal spoilage = nil (nothing) (no abnormal spoilage)