Option #1: DPC and Weighted Average Method

DPC manufactures medical testing strips in a continuous process environment.

Direct materials are added at the beginning of the process. Conversion costs are added throughout the manufacturing process. The manufacturer has a computer-aided quality control step that

rejects 1.5% of the production for defects.

Requirements:

Compute the numbers for normal and abnormal spoilage.

Compute the equivalent units.

Compute the cost per unit completed and transferred out of the process.

Summarize the total costs to account for, compute the cost per equivalent units, and assign costs.

Dekalb Processing Company (DPC)
DPC manufactures medical testing strips. This is a continous Process enviroment.
Direct Material are added at the beginning of the process. Conversion costs are adding all during the manufacturing process. The manufacturing has a computer aided quality control step which
rejects 1.5% of the production for defects. Summary data for this period are as follows:

Week 4 option 1 assignment
Dekalb Processing Company (DPC)
DPC manufactures medical testing strips. This is a continous Process enviroment.
Direct Material are added at the beginning of the process. Conversion costs are adding all during the manufacturing process. The manufacturing has a computer aided quality control step which
rejects 1.5% of the production for defects. Summary data for this period are as follows:
	Physical Units	Direct Material	Conversion Costs
WIP , Beginning	10,000	250,000	100,000
Degree of completion, beginning WIP		100%	50%
Started this period	12,000
TOTAL UNITS TO ACCOUNT FOR:
Good units completed and transferred	?
WIP, ending inventory	2,000
TOTAL UNITS ACCOUNTED FOR:
Degree of completion of ending WIP		100%	60%
Total costs added this period		$ 500,000	$ 250,000
Normal spoliage as a % of good units	1.5 % of good units
Degree of completion of normal goods		100%	100%
Degree of completion of abnormal goods		100%	100%
Required:
1). Compute the units to account for, number of normal spoilage and number of abnormal spoilage.
2). Compute the Equivalent Units.
3). Compute the cost per unit and completed and transferred out of the process.
4). Compute the total costs to account for, compute cost per equivalent unit, and assign costs.

Week 4 option 1 assignment
Step 1: Determine the physical flow of Units
Weighted average Costing	Physical Units	Direct Material	Conversion Costs
WIP , Beginning
Degree of completion, beginning WIP
Started this period
TOTAL UNITS TO ACCOUNT FOR:
Good units completed and transferred
WIP , ending inventory
TOTAL UNITS ACCOUNTED FOR:
Degree of completion of ending WIP
Total costs added this period
Step Two compute Spoilage:
Identify the number of normal and abnormal spoilage
	Normal Spoilage=
	Abnormal Spoilage =
	Abnormal Spoilage =
	Total Spoilage

Step 3: compute equivalent Units of Production
Weighted eqivalent units
		Total Production costs	Direct Material	Conversion Costs		Notes
	WIP, beginning
	started during the period
	to Account for
	Goods units completed and transferred
	Normal spoilage
	Abnormal Spoilage
	WIP, ending
	Accounted for
	Equivalent units for WIP

Step 4: compute the cost per equivalent Units (EUP)
Weighted eqivalent units
		Total Production costs	Direct Material	Conversion Costs
	WIP, beginning
	costs added in current period
	total costs to account for
	divide by
	cost per equivalent unit
STEP 5 Assign and Reconcile Costs
	Assignment of costs
	good units completed and transferred out
	WIP, Ending
	goods units completed and transferred out
	costs added before normal spoilage
	normal spoilage
	total costs of goods units completed
	abnormal spoilage
	Total costs account for