Question
McKay Materials are added at the beginning of the process in McKay Company's blending department, the first stage of the production cycle. The inspection point
McKay Materials are added at the beginning of the process in McKay Company's blending department, the first stage of the production cycle. The inspection point is at the end of the process. The following information is available for the month of July:
Units Work in process, July 1 (35% complete as to conversion costs) 50,000
Started in July 200,000
Completed and transferred to the next department 195,000
Work in process, July 31 (40% complete as to conversion costs) 45,000
Costs in beginning work in process Direct materials $125,600
Conversion $104,300
Costs added in July Direct materials $349,400
Conversion $397,500
a) McKay estimates that normal spoilage is 2% of the good units completed. Using the weighted average cost method, what is the cost of the units transferred out of the blending department? (ROUND ALL COST PER EQUIVALENT UNIT CALCULATIONS TO THE NEAREST PENNY)
$825,435
$850,750
$846,500
$834,565
$809,250
None of the answers listed are correct
b)
McKay estimates that normal spoilage is 2% of the good units completed. Using the weighted average cost method, what amount will be identified as abnormal spoilage? (ROUND ALL COST PER EQUIVALENT UNIT CALCULATIONS TO THE NEAREST PENNY)
$17,226
$24,900
$25,315
None of the answers listed are correct
$16,185
$11,014
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