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Sparkling Ltd is a food processing company manufacturing a soft drink product. Each product will pass through the Carbonating Process. All direct materials are applied
Sparkling Ltd is a food processing company manufacturing a soft drink product. Each product will pass through the Carbonating Process. All direct materials are applied at the beginning of the process and conversion costs are added evenly during the process. All spoilage is detected by the final inspection at the end of the process. Normal spoilage is 10% of all good units that pass inspection. Spoilage units are disposed of at zero net disposal value. The company adopts the weighted-average method of process costing. Data for the Carbonating Process in December are as follows: Physical Direct Conversion units materials costs Work in process, beginning, 1 December 17,500 $35,000 $79,400 Started during December 107,500 Good units completed and transferred out during December 97,500 Work in process, ending 31 December 14,000 Total costs added during December $465,000 $165,000 Degree of completion of beginning work in process Degree of completion of ending WIP 100% 60% 100% 80% Required: (a) For December 2018, show the physical units and compute the equivalent units for each of the cost category. (b) Also for December 2018, summarize total costs to account for and assign these costs to: (i) units completed and transferred out (including normal (ii) spoilage); abnormal spoilage; (iii) units in ending work in process. (c) You are the financial controller of Sparkling Ltd. What issues should you focus on when reviewing the equivalent unit calculation
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