Question
Edwards manufactures small tables in its Processing Department. Direct materials are added at the initiation of the production cycle and must be bundled in single
Edwards manufactures small tables in its Processing Department. Direct materials are added at the initiation of the production cycle and must be bundled in single kits for each unit. Conversion costs are incurred evenly throughout the production cycle. Inspection occurs when units are 60% converted. Normal spoilage, if any, generally constitute 4% of the good units - units that successfully passed the inspection in current month. Company use FIFO method. Data for May 2021 are as follows: WIP, beginning inventory 5/1/2021 24,200 units Direct materials (100% complete) Conversion costs (75% complete) Started during December 83,600 units Completed and transferred out 5/31/2021 79,200 units WIP, ending inventory 5/31/2021 19,800 units Direct materials (100% complete) Conversion costs (65% complete) Costs for December: WIP, beginning Inventory: Direct materials $ 165,000 Conversion costs 84,480 Direct materials added 244,640 Conversion costs added 319,000 Compute the conversion cost per equivalent unit in May.
Compute total normal spoilage cost.
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