Weighted Average and Spoilage (SIA) The Ground Company manufactures a product MOP on a continuous-process basis through one department. The product MOP requires the following parts:

1 Subassembly ‘“‘K’’—beginning of process 1 Part “L’’—beginning of process 2 Part ‘“‘M’’—when 60% completed The subassembly “K” was formerly produced by the Ground Company in another department and then transferred in. For economical reasons, the company discontinued manufacturing the subassembly “K” a year ago and instead buys it from a a local supplier at a unit cost of $2.10.

Labor and overhead costs are added continuously throughout the process.

Overhead is applied at 150 percent of direct-labor cost.

The work-in-process inventory at the beginning of April consisted of 2,500 units at a cost of $7,520 (“K”—$5,250, “L”—$1,050, conversion cost $1,220).

During April, 19_4, the following activities took place:

New units started: 21,000

. Parts usage: “L”—$8,350, “M”—$10,200

. Direct-labor cost: $18,520

. Units completed during month: 16,000

. An unexpected loss occurred with all the beginning work-in-process units, owing to a mechanical failure in the calibrating machine. The loss was discovered when the units were 40 percent completed. The Controller asked to show this loss separately.

6. Ending work in process consisted of 4,000 units, 50 percent completed.

OF NhB The normal spoilage was as expected. Since normal spoilage is detected at the 80% completion stage, it has been the company’s practice to charge this normal loss to the cost of the completed units for the month.

Prepare a cost-of-production report for the month of April. Show the output in equivalent units and summarize the application of costs to products. Assume that the weighted-average method is used. lop5