Management Accounting 2 Thank you very much for taking the time to respond to my question. Wish u have a nice day and stay safe from this pandemic, dear Tu.tor ^^

Q7.

A

Consider the following data for November 2020 from Gray Manufacturing Company, which makes silk pennants and uses a process-costing system. All direct materials are added at the beginning of the process, and conversion costs are added evenly during the process. Spoilage is detected upon inspection at the completion of the process. Spoiled units are disposed of at zero net disposal value. Gray Manufacturing Company uses the weighted-average method of process costing.

---------------------------------------------------------------------------Physical Units (Pennants) Direct Materials Conversion Costs

Work in process, November 1a 1,000 $ 1,423 $ 1,110

Started in November 2020 ?

Good units completed and transferred

out during November 2020 9,000

Normal spoilage 100

Abnormal spoilage 50

Work in process, November 30b 2,000

Total costs added during November 2020 $12,180 $27,750

a-- Degree of completion: direct materials, 100%; conversion costs, 50%.

b--Degree of completion: direct materials, 100%; conversion costs, 30%

Required:

Compute equivalent units for direct materials and conversion costs. Show physical units in the first column of your schedule.

(B) (8 marks)

Spoilage can be a significant cost for many organizations. Discuss when spoilage might happen and how the costs of normal spoilage get allocated.