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C ad J PI Rounder specializes in the manufacture of ball bearings for aircraft. Direct materials are added at the start of the production
C ad J PI Rounder specializes in the manufacture of ball bearings for aircraft. Direct materials are added at the start of the production process. Conversion costs are added evenly during the process. Some units of this product are spoiled as a result of defects not detectable before inspection of finished goods. Normally, the spoiled units are 15% of the good units transferred out. Spoiled units are disposed of at zero net disposal price. Suppose Rounder determines standard costs of $240 per (equivalent) unit for direct materials and $120 per (equivalent) unit for conversion costs for both beginning work in process and work done in the current period. Summary data for September are: (Click the icon to view the data.) Required 1. For each cost element, compute the equivalent units. Show physical units in the first column. 2. For each cost element, calculate the cost per equivalent unit. 3. Summarize the total costs to account for, and assign these costs to units completed and transferred out (to normal spoilage), to abnormal spoilage, and to units in ending work in process. Data table Physical Units Direct Conversion (ball bearings) Work in process, September 1 1,400 Materials $92,630 Costs $17,560 el Started during September 2,600 De Good units completed and transferred out during September 2,600 Work in process, September 30 500 Costs added during September $582,300 $292,500 h Degree of completion: direct materials, 100%; conversion costs, 30%. Degree of completion: direct materials, 100%; conversion costs, 40%. Print Done
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