Spoilage, Weighted-Average Method; Transferred-in Costs (Appendix) Romano Foods Inc. manuf...

Spoilage, Weighted-Average Method; Transferred-in Costs (Appendix) Romano Foods Inc. manufactures 12-inch Roman Surprise Fresh Frozen Pizzas that retail for $4.69 to $5.99, depending upon the topping. The company employs a process costing system in which the product flows through several processes. Joe Corolla, vice president of production, has had a long-running disagreement with the controller, Sue Marshall, over the way to handle spoilage cost. Joe resists every attempt to charge production with variance responsibilities unless they are favorable. Spoilage costs have not been significant in the past, but, in November, the mixing department had a substantial amount of spoilage. Romano Foods has traditionally treated 10 percent of good output as normal spoilage. The mixing department input 120,000 units of ingredients; inspection rejected 13,000 dough units. Sue is concerned about the abnormal spoilage and wants Joe to take corrective steps. He maintains, however, that the mixing department is operating properly and has prepared the following report to support his contention:

Sue read the report and found out that Joe miscalculated both normal and abnormal spoilage units, and he ignored the normal spoilage in calculating the unit cost.

Required

1. Revise Joe Corolla’s production cost report for November 2010 by calculating the correct numbers or amounts for the following:

a. The number of units of normal spoilage.

b. The number of units of abnormal spoilage.

c. The total and per-unit costs of the mixing department’s production of good units in November.

d. The total and per-unit costs of abnormal spoilage.

2. Prepare the journal entry to transfer costs for the mixing department for November to the assembly department.

3. Describe how Joe Corolla’s production cost report has shown the performance of the mixing department to be less favorable than that shown in the revised report in requirement 1.