Fish Fillet Incorporated obtains fish and then processes them into frozen fillets and then prepares the frozen fish 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 undetectable defects. Inspection occurs when units are 40% converted. Spoiled fillets generally constitute 6% of the good fillets. Data for April 2017 are as follows:
WIP, beginning inventory 4/1/2017 85,000 fillets
Direct materials (100% complete)
Conversion costs (50% complete)
Started during April 134,000 fillets
Completed and transferred out 4/30/2017 183,000 fillets
WIP, ending inventory 4/30/2017 24,000 fillets
Direct materials (100% complete)
Conversion costs (25% complete)
Costs for April:
WIP, beginning Inventory:
Direct materials $140,000
Conversion costs 105,910
Direct materials added 309,000
Conversion costs added 390,130
What cost is allocated to abnormal spoilage using the weighted-average process-costing method? (Round any cost per unit calculations to the nearest cent.)
A. |
$ 0 |
|
B. |
$4610 |
|
C. |
$2091 |
|
D. |
$2106 |
The correct option is B: $4,610.
Compute equivalent units as follows;
Physical Units | Equivalent Units | ||
Direct Materials | Conversion Costs | ||
Work-in-process, Beginning | 85,000 | ||
Started during current period | 134,000 | ||
To account for | 219,000 | ||
Goods units completed and transferred | 183,000 | 183,000 | 183,000 |
Normal spoilage (183,000 × 6%) | 10,980 | ||
(10,980 × 100%) | 10,980 | 10,980 | |
Abnormal spoilage | 1,020 | ||
(1,020 × 100%) | 1,020 | 1,020 | |
Work-in-process, Ending | 24,000 | ||
(24,000 × 100%) ; (24,000 × 25%) | 24,000 | 6,000 | |
Equivalent units | 219,000 | 201,000 |
Compute cost allocated to abnormal spoilage:
Total Costs | Direct Materials | Conversion Costs | |
Work-in-process, Beginning | $245,910 | $140,000 | $105,910 |
Costs added in current period | $699,130 | $309,000 | $390,130 |
Total costs incurred to date | $449,000 | $496,040 | |
÷ Equivalent units | 219,000 | 201,000 | |
Cost per equivalent unit | $2.05 | $2.47 | |
Costs allocated to abnormal spoilage: | |||
(1,020 × $2.05);(1,020 × $2.47) | $4,610 | $2,091 | $2,519 |
Fish Fillet Incorporated obtains fish and then processes them into frozen fillets and then prepares the...
Fish Fillet Incorporated obtains fish and then processes them into frozen fillets and then prepares the frozen fish 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 undetectable defects. Inspection occurs when units are 40%converted. Spoiled fillets generally constitute 4% of the good fillets. Data for April 2017 are as follows: WIP, beginning inventory...
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%...
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