Question

Fish Fillet Incorporated obtains fish and then processes them into frozen fillets for distribution to its retail sales department. Direct materials are added at the initiation of the cycle. Conversion costs are incurred evenly throughout the production cycle. Before inspection, some fillets are spoiled due to non-detectible defects. Inspection occurs when units are 40% converted. Spoiled fillets generally constitute 3.5% of the good fillets.

Data for April 2018 are as follows:
WIP, beginning inventory 4/1/2018 40,000 fillets
Direct materials (100% complete)
Conversion costs (50% complete)
Started during April 75,000 fillets
Completed and transferred out 4/31/2018 100,000 fillets
WIP, ending inventory 4/31/2018 9,000 fillets
Direct materials (100% complete)
Conversion costs (20% complete)

What is the number of units of normal spoilage?

Answer 1

Answer

--Requirement: No. of units of normal spoilage

>No. of units of normal spoilage = 3.5% of units transferred
= 3.5% of 100000 fillets transferred
= 3500 units. Answer