Chiptown 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 Chiptown determines standard costs of $230 per equivalent unit for direct materials and $90 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 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.

Physical Units Direct Conversion

(computer chips) Materials Costs

Work in process, beginning inventory (Sept. 1) 1,300 $96,000 $16,500

Degree of completion of beginning WIP 100 % 30%

Started during September 2,000 Good units completed and transferred out during September 1,700 Work in process, ending inventory (Sept. 30) 900
Degree of completion of ending WIP	100 %	35 %
Total costs added during September Normal spoilage as a percentage of good units 15 %	$579,000	$238,000
Degree of completion of normal spoilage	100%	100%
Degree of completion of abnormal spoilage	100%	100%