(CMA) Process costing without a separate spoiled unit cost West Corporation is a manu- facturing company with several divisions. A product called Aggregate is manufactured in one department of the California Division. Aggregate is transferred upon completion to the Utah Division at a predetermined price, where it is used in the manufacture of other products.

The raw material is added at the beginning of the process. Labor and overhead are added continuously throughout the process. Shrinkage of 10 to 14%, all occurring at the beginning of the process, is considered normal. In the California Division all departmental overhead is charged to the departments and divisional overhead is allocated to the departments on the basis of direct labor hours. The divisional overhead rate is $2 per direct labor hour.

The following information relates to production during November.

The FIFO method is used for materials inventory valuation and the weighted average method is used for work in process inventories. A separate cost for shrinkage is not required.

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Work in process, November 1 (4,000 pounds - 75% converted) Raw materials ..... $22,800 Direct labor @ $5.00 per hour 24,650 Departmental overhead... 12,000 Divisional overhead... Raw materials: 9,860 Inventory November 1, 2,000 pounds. Purchases November 3, 10,000 pounds. $10,500 51,000 51,500 Purchases November 18, 10,000 pounds. Released to production during November Direct labor costs @ $5.00 per hour Direct departmental overhead costs Transferred to Utah Division Work in process, November 30, 33 1/3% converted $103,350 52,000 16,000 pounds 15,000 pounds 3,000 pounds