3 (20 marks (A) LC Company produces handbags from leather of moderate quality. It distributes the product through outlet stores and department store chains. At LC's facility in Raub, direct materials (primarily leather hides) are added at the beginning of the process. while conversion costs are added evenly during the process. Given the importance of minimizing product returns. spoiled units are detected upon inspection at the end of the process and are discarded at a net disposal value of zero. LC uses the weighted-average method of process costing. Summary data for April 2021 are as follows: Physical Direct Conversion Units Materials Costs Work in process, beginning inventory (April 1) Degree of completion of beginning work in process Started during April 2,400 $21,240 100% $ 13,332 50% 12,000 Good units completed and transferred out during April 10,800 Work in process, ending inventory (April 30) 2,160 Degree of completion of ending work in process Total costs added during April 100% $97,560 75% $111,408 Normal spoilage as a percentage of good units 10% Degree of completion of normal spoilage Degree of completion of abnormal spoilage 100% 100% 100% 100% Required: 1. For each cost category, calculate equivalent units. Show physical units in the first column of your schedule. (5 marks) 2. Summarize the total costs to account for; calculate the cost per equivalent unit for each cost category: and assign costs to units completed and transferred out (including normal spoilage), to abnormal spoilage, and to units in ending work in (9 marks) process. (B) You are the chief financial officer of a lumber mill, and you are becoming quite concerned about the spoilage, scrap, and reworked items associated with your production processes. Your firm produces mainly products for the building industry. Required: Discuss the problems associated with these items and the methods your company can use to reduce spoilage, scrap. and reworked items. (6 marks)