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What cost is allocated to abnormal spoilage

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Reference no: EM132556365

Outose Concept manufactures small tables in its Processing Department. Direct materials are added at the initiation of the production cycle and must be bundled in single kits for each unit. Conversion costs are incurred evenly throughout the production cycle. Before inspection, some units are spoiled due to nondetectible materials defects. Inspection occurs when units are 50% converted. Spoiled units generally constitute 5% of the good units.

Data for December 2015 are as follows:

WIP, beginning inventory 12/1/2015                             22700 units
Direct materials (100% complete)
Conversion costs (75% complete)

Started during December                                           77,000 units
Completed and transferred out 12/31/2015                    72000 units
WIP, ending inventory 12/31/2015                               18,000 units
Direct materials (100% complete)
Conversion costs (65% complete)

Costs for December:

WIP, beginning Inventory:

Direct materials                               $151,000
Conversion costs                                77,700
Direct materials added                       228,400
Conversion costs added                      299,000

Question 1: What cost is allocated to abnormal spoilage using the weighted-average process-costing method?

Reference no: EM132556365

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