Question
Chippity Inc. is a fast-growing manufacturer of computer chips. Direct materials are added at the start of the production process. Conversion costs are added evenly
Chippity Inc. is a fast-growing manufacturer of computer chips. 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. Spoiled units are disposed of at zero net disposal value. Suppose
Chippity
determines standard costs of
$260
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:
Required
1. | For each cost category, compute equivalent units. Show physical units in the first column of your schedule. |
2. | Summarize total costs to account for, calculate cost per equivalent unit for each cost category, and assign total costs to units completed and transferred out (including normal spoilage), to abnormal spoilage, and to units in ending work in process. |
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