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Bhavani Chemicals uses the weighted average process costing method. The company began April with a WIP inventory of 2,500 units (15% complete) and 72,875 units
Bhavani Chemicals uses the weighted average process costing method. The company began April with a WIP inventory of 2,500 units (15% complete) and 72,875 units were entered into production during the month. Conversion costs are incurred uniformly over the production process. Bhavani determines that the 3,500 units in its ending WIP are 90% complete with respect to conversion, and values this inventory (before any adjustments for spoilage) at $20 per unit. The company also determines that the cost of the completed units is $1,493,625 (before any adjustments for spoilage). Based on inspection (at the 40% point), Bhavani determines that 250 units are normally spoiled, with a cost of $3,750. -125 units are abnormally spoiled, with a cost of -$2,375 (that is, there is a gain from abnormal spoilage). What is the total cost of the ending WIP, after adjusting for spoilage? Enter your answer without a dollar sign or commas, and round to the nearest dollar (if necessary). Hint: You should not need to complete an entire a process costing worksheet to solve this problem. Just focus on adjusting the cost of ending WIP for the spoilage (if needed)
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