Question
SHOW YOUR WORK Craft Concept manufactures small tables in its Processing Department. Direct Materials are added at the initiation of the production cycle and must
SHOW YOUR WORK
Craft 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 non- detectable materials defects. Inspection occurs at the end of the process. Spoiled units generally constitute 5 percent of the good units. Data for December are as follows:
| WIP, Beginning inventory Dec 1 | 10,000 units |
| Direct materials: 100% complete | |
| Conversion costs: 75% complete | |
| Started during December | 40,000 units |
| Completed and Transferred Out during month | 38,400 units |
| WIP, Ending inventory December 31 | 8,000 units |
| Direct materials: 100% complete | |
| Conversion costs: 65% complete | |
| Costs: | |
| WIP, Beginning Inventory: | |
| Direct materials | $50,000 |
| Conversion costs | 30,000 |
| Direct materials added during December | 100,000 |
| Conversion costs added during December | 140,000 |
What is the number of total spoiled units?
| a. | 2,700 units |
| b. | 1,600 units |
| c. | 3,600 units |
| d. | 2,000 units |
| e. | 4,500 units |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Managerial Accounting Decision Making and Motivating Performance
Authors: Srikant M. Datar, Madhav V. Rajan
1st edition
132816245, 9780132816243, 978-0137024872
