16.

Giddings Pharmaceutical Company is a maker of drugs for high blood pressure and uses a process costing system. The following information pertains to the final department of Giddings's blockbuster drug called Solcax.

Beginning work-in-process (40% completed)		575	units
Transferred-in		3,100	units
Normal spoilage		355	units
Abnormal spoilage		155	units
Good units transferred out		2,700	units
Ending work-in-process (1/3 completed)		465	units
Conversion costs in beginning inventory	$	2,076
Current conversion costs	$	6,000

Giddings calculates separate costs of spoilage by computing both normal and abnormal spoiled units. Normal spoilage costs are reallocated to good units and abnormal spoilage costs are charged as a loss. The units of Solcax that are spoiled are the result of defects not discovered before inspection of finished units. Materials are added at the beginning of the process. Using the weighted-average method, answer the following question: What are the unit conversion costs?

Multiple Choice

• $2.52.

• $2.40.

• $2.20.

• $2.64.