Question
Scrapping the Bottom, Inc. is a manufacturer of peanut butter. The jars of peanut butter pass through two sequential production departments before landing in finished
Scrapping the Bottom, Inc. is a manufacturer of peanut butter. The jars of peanut butter pass through two sequential production departments before landing in finished goods inventory. The company's first processing department, machining, reported the following information for its most recent month of operations:
direct materials | direct labor | allocated MOH | |
costs in beginning work in process | $4,320 | $1,040 | $1,790 |
costs added during the month | $52,800 | $21,500 | $32,250 |
The machining department's beginning inventory consisted of 5,000 physical units that were 80% complete with respect to direct material and 60% complete with respect to conversion. During the month, 45,000 physical units were started in the department. At month end, 8,000 physical units were in the department's ending inventory. The units in ending inventory were 75% complete with respect to direct material and 50% complete with respect to conversion.
You asked one of the staff members on your team to calculate the cost to machine a unit for the most recent month of operations. The staff member emailed you the following calculations:
DM | C | ||
total costs to account for | $57,120 | $56,580 | |
divided by units | 42,000 | 42,000 | |
cost per unit | $1.36 | $1.35 | $2.71 |
Where did they go wrong?
A.
They used the percentage of completion for units in beginning inventory instead of the percentage of completion for units in ending inventory.
B.
They forgot to include allocated manufacturing overhead in the conversion costs.
C.
They did not include the beginning inventory costs on the total costs to account for line.
D.
They failed to account for units in ending inventory.
E.
They divided the total costs to account for by total physical units instead of total equivalent units.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started