(spoilage) Elegant, USA manufactures steeringwheel covers for various brands of luxury cars. At its Jamaica,plant direct materials and the conversion costs are added evenlyduring the process. Given the importance of minimizing productreturns, spoiled units are detected upon inspection at variouslevels of the production process and are discarded at a netdisposal value of zero.
The following data summarizes the mostrecent Elegant USA uses the FIFO method of accounting for spoilageand the numbers for the production pr Based on the followingnumbers respond the question
Physical Units
Direct Material
Conversion Costs
Beginning Inventory
2500
$ 23,450
$ 22,312
Degree of Completion of Beginning WIP
100%
80%
Costs Added in Current Month
$ 123,075
$ 132,500
Started during the current month
14,000
Good Units Completed and Transferred Out during the month
11,000
WIP, Ending Inventory
3,750
Degree of Completion of Ending WIP
100%
70%
Total Costs Added during the month
Normal Spoilage
1000
Degree of Completion of Normal Spoilage
90%
70%
Abnormal Spoilage
750
Degree of completion of abnormal spoilage
60%
90%
Required:
Using the FIFO method
Calculate equivalent units.
Determine the total costs to account for;
calculate the cost per equivalent unit for each costcategory;
assign costs to units completed and transferred out
determine the value of normal spoilage and abnormal spoilage,and
determine the dollar value of the units in ending work inprocess.
What are the managerial issues involved in selecting orreviewing the percentage of spoilage considered normal?
(spoilage) Elegant, USA manufactures steeringwheel covers for various brands of luxury cars. At its Jamaica,plant direct materials and the conversion costs are added evenlyduring the process. Given the importance of minimizing productreturns, spoiled units are detected upon inspection at variouslevels of the production process and are discarded at a netdisposal value of zero.
The following data summarizes the mostrecent Elegant USA uses the FIFO method of accounting for spoilageand the numbers for the production pr Based on the followingnumbers respond the question
Physical Units | Direct Material | Conversion Costs | |
Beginning Inventory | 2500 | $ 23,450 | $ 22,312 |
Degree of Completion of Beginning WIP | 100% | 80% | |
Costs Added in Current Month | $ 123,075 | $ 132,500 | |
Started during the current month | 14,000 | ||
Good Units Completed and Transferred Out during the month | 11,000 | ||
WIP, Ending Inventory | 3,750 | ||
Degree of Completion of Ending WIP | 100% | 70% | |
Total Costs Added during the month | |||
Normal Spoilage | 1000 | ||
Degree of Completion of Normal Spoilage | 90% | 70% | |
Abnormal Spoilage | 750 | ||
Degree of completion of abnormal spoilage | 60% | 90% |
Required:
Using the FIFO method
Calculate equivalent units.
Determine the total costs to account for;
calculate the cost per equivalent unit for each costcategory;
assign costs to units completed and transferred out
determine the value of normal spoilage and abnormal spoilage,and
determine the dollar value of the units in ending work inprocess.
What are the managerial issues involved in selecting orreviewing the percentage of spoilage considered normal?