QUESTION 7 Outose Concept 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. Before inspection, some units are spoiled due to nondetectible materials defects. Inspection occurs when units are 55% converted. Spoiled units generally constitute 6% of the good units. Data for December 2015 are as follows: 22,200 units WIP, beginning inventory 12/1/2015 Direct materials (100% complete) Conversion costs (80% complete) Started during December Completed and transferred out 12/31/2015 WIP, ending inventory 12/31/2015 Direct materials (100% complete) Conversion costs (65% complete) 76,400 units 72,200 units 18,000 units Costs for December: WIP, beginning Inventory: Direct materials Conversion costs Direct materials added Conversion costs added $ 158,000 77,400 223,400 295,000 Normal spoilage totals O 4080 units O 8400 units 4322 units 4068 units QUESTION 8 Bismite Corporation purchases trees from Cheney lumber and processes them up to the splitoff point where two products (paper and pencil casings) are obtained. The products are then sold to an independent company that markets and distributes them to retail outlets. The following information was collected for the month of October: 250 trees Trees processed: Production: paper pencil casings paper pencil casings 150,000 sheets 150,000 142,000 at $0.10 per page 146,000 at $0.13 per casing Sales: The cost of purchasing 250 trees and processing them up to the splitoff point to yield 150,000 sheets of paper and 150,000 pencil casings is $13,000. Bismite's accounting department reported no beginning inventory. If the sales value at splitoff method is used, what is the approximate production cost for each pencil casing? $0.049 $0.040 $0.052 $0.038