29. (Shrinkage; WA) Department 1 of Super Patties cooks ground beef for hamburger patties. The patties are then transferred to Department 2 where they are placed on buns, boxed, and frozen. The accepted level of shrinkage in Department 1 is 10 percent of the pounds started. Super Patties uses a weighted average process costing system and has the following production and cost data for Department 1 for May 2001:

Beginning inventory (80% complete as to conversion) 1,000 pounds Started 125,000 pounds Transferred to Department 2 (550,000 patties) 110,000 pounds Ending inventory (30% complete as to conversion) 3,000 pounds Beginning inventory cost of ground beef $ 1,020 May cost of ground beef $106,710 Beginning inventory conversion cost $ 195 May conversion cost $ 27,630

a. What is the total shrinkage (in pounds)?

b. How much of the shrinkage is classified as normal? How is it treated for accounting purposes?

c. How much of the shrinkage is classified as abnormal? How is it treated for accounting purposes?

d. What is the total cost of the patties transferred to Department 2? Cost of ending inventory? Cost of abnormal spoilage?

e. How might Super Patties reduce its shrinkage loss? How, if at all, would your solution(s) affect costs?