TOPIC: PROCESS COSTING-LOST UNITS

P11-5 Teacup Company manufactures quality tea. During production process some units are determined to be spoiled (normal or abnormal) and later sold after rework. The books and records showed following data for the month of July Opening inventory 2,000 units (fully completed with respect direct material, 30 % with respect to labor and overhead) Started during the month 15,000 units Completed during the month 13,000 units Ending inventory 1,500 units (fully completed with respect to material, 80% completed with respect to labor and overhead) Inspection for spoiled units take place when units are 100% completed with respect to direct material, labor, and overhead. Cost incurred on materials (current and inventory) P80,000 Cost incurred on labor and overhead (current and inventory) 112,000 Total P192,000 Normal spoilage considered 10% of production cost Normal spoilage able to be reworked considered 2% of spoiled units Cost to complete reworked units is P3.00 per unit Recovery value of spoiled units is P0.50 per unit a. Required: Compute the cost per equivalent unit. b. Compute the total cost of batches. Compute the total cost of spoilage. d. Assuming that rework has been completed, how much cost of rework will be transferred to ending inventory? C