Question
Giddings Pharmaceutical Company is a maker of drugs for high blood pressure and uses a process costing system. The following information pertains to the final
Giddings Pharmaceutical Company is a maker of drugs for high blood pressure and uses a process costing system. The following information pertains to the final department of Giddings's blockbuster drug called Solcax.
Beginning work-in-process (40% completed)800units
Transferred-in4,000units
Normal spoilage400units
Abnormal spoilage200units
Good units transferred out3,600units
Ending work-in-process (1/3 completed)600units
Conversion costs in beginning inventory$2,560
Current conversion costs$6,900
Giddings calculates separate costs of spoilage by computing both normal and abnormal spoiled units. Normal spoilage costs are reallocated to good units and abnormal spoilage costs are charged as a loss. The units of Solcax that are spoiled are the result of defects not discovered before inspection of finished units. Materials are added at the beginning of the process. Using the weighted-average method, answer the following question:
What are the total conversion costs of abnormal spoilage?
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