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Question 1 (Total = 18 marks) al Bright Right, Inc. manufactures surgical instruments to the exacting specifications of various customers. During April 2019, Job 911
Question 1 (Total = 18 marks) al Bright Right, Inc. manufactures surgical instruments to the exacting specifications of various customers. During April 2019, Job 911 for producing 4,500 instruments was completed at the following costs per unit: Direct materials Direct manufacturing labor Allocated manufacturing overhead $ 60 20 80 $160 Final inspection of Job 911 disclosed 100 defective units and 50 spoiled units. The defective instruments were reworked at a total cost of $12,000, and the spoiled instruments were sold to a jobber for $3,000. i/ What would be the unit cost of the good units produced and transferred out on Job 911? ii/ If the costs associated with spoilage and reworked units are considered as abnormal to manufacturing operations, what is the unit cost of the good units produced and transferred out on Job 911? (3 marks) b/ Vitty Gitty 's Office Supplies manufactures desk organizers in its Processing Department. Direct materials are included at the inception of the production cycle and must be bundled in single kits for each unit. Conversion costs are incurred evenly throughout the production cycle. Inspection takes place as units are placed into production. After inspection, some units are spoiled due to undetectable material defects. Spoiled units generally constitute 4% of the good units. Data provided for February 2017 are as follows: 51,700 units WIP, beginning inventory 2/1/2017 Direct materials (100% complete) Conversion costs (55% complete) Started during February Completed and transferred out 170,400 units 180,000 units 26,800 units WIP, ending inventory 2/28/2017 Direct materials (100% complete) Conversion costs (25% complete) Costs: WIP, beginning inventory: Direct materials Conversion costs Direct materials added Conversion costs added $280,000 80,400 408,900 264,500 What are the total costs of all the units that were initially in the beginning work-in-process inventory and were subsequently shipped? You have to take into account the costs related to the completion of the conversion of the units during the month. Use the FIFO method of process costing. (Round any cost per unit calculations to the nearest cent.) (4 marks) c/ Creative Works manufactures desk organizers in its Processing Department. Direct materials are included at the inception of the production cycle and must be bundled in single kits for each unit. Conversion costs are incurred evenly throughout the production cycle. Inspection takes place as units are placed into production. After inspection, some units are spoiled due to undetectable material defects. Spoiled units generally constitute 5% of the good units. Data provided for February 2017 are as follows: 51,600 units WIP, beginning inventory 2/1/2017 Direct materials (100% complete) Conversion costs (50% complete) Started during February Completed and transferred out 170.400 units 181,000 units 26,300 units WIP, ending inventory 2/28/2017 Direct materials (100% complete) Conversion costs (30% complete) Costs: WIP, beginning inventory: Direct materials Conversion costs Direct materials added Conversion costs added $280,300 80,100 408,500 264,900 What are the total costs of all the units that were started during February and transferred out before the end of the period? (Round any cost per unit calculations to the nearest cent.) (4 marks) d/ In no more than 150 words, state and explain the assumptions that you have made when accounting for spoilage above (a/ to c/) and contrast these assumptions with business activities that have occurred. (7 marks)
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