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APCO Company manufactures various lines of bicycles. Because of the high volume of each line, the...

APCO Company manufactures various lines of bicycles. Because of the high volume of each line, the company employs a process costing system using the weighted-average method. Bicycle parts are manufactured in the molding department and then are consolidated into a single bike unit in the molding department and transferred to the assembly department where they are assembled. After assembly, the bicycle is sent to the packing department. Annual cost and production figures for the assembly department are presented in the schedules below.

Defective bicycles are identified at the inspection point when the assembly labor process is 70% complete; all assembly materials have been added at this point. The normal rejection rate for defective bicycles is 5% of the bicycles reaching the inspection point. Any defective bicycles above the 5% quota are considered to be abnormal. All defective bikes are removed from the production process and destroyed.

Assembly Department Cost Data Total Cost of
Bike through
Assembly
Transferred-in
from Molding
Department
Assembly
Materials
Assembly
Conversion
Prior period costs $ 102,200 $ 9,660 $ 15,330 $ 127,190
Current period costs 1,253,800 106,440 251,190 1,611,430
Total costs $ 1,356,000 $ 116,100 $ 266,520 $ 1,738,620
Assembly Department Production Data
Percentage Complete
Bicycles Transferred-in Assembly
Materials
Assembly
Conversion
Beginning inventory 3,200 100 % 100 % 80 %
Transferred-in from molding during year 65,000 100
Transferred out to packing during year 50,000 100 100 100
Ending inventory 4,400 100 50 20

Required:

1. Compute the number of defective, or spoiled, bikes that are considered to be

a. Normal spoilage

b. Abnormal spoilage.

2. Compute the equivalent units of production for the year for

a. Bicycles transferred in from the molding department.

b. Bicycles produced with regard to assembly materials.

c. Bicycles produced with regard to assembly conversion.

3. Compute the cost per equivalent unit for the fully assembled bike.

4. Compute the amount of the total production cost of $1,738,620 that will be associated with the following items:

a. Normal spoiled units.

b. Good units completed in the assembly department.

c. Abnormal spoiled units.

d. Ending Work-in-Process Inventory in the assembly department.

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