The following data, in physical units, describe a grinding process for January:Work in process, beginning 19,000Started during current period 50,000To account for 169,000Spoiled units 12,000Good units completed and transferred out 132,000Work in process, ending 25,000Accounted for 169,000Inspection occurs at the 100% completion stage. Normal spoilage is 5% of the goodunits passing inspection.Required:1. Compute the normal and abnormal spoilage in units.2. Assume that the equivalent-unit cost of a spoiled unit is $10. Compute theamount of potential savings if all spoilage were eliminated, assuming thatall other costs would be unaffected. Comment on your answer.
The following data, in physical units, describe a grinding process for January:Work in process, beginning 19,000Started during current period 50,000To account for 169,000Spoiled units 12,000Good units completed and transferred out 132,000Work in process, ending 25,000Accounted for 169,000Inspection occurs at the 100% completion stage. Normal spoilage is 5% of the goodunits passing inspection.Required:1. Compute the normal and abnormal spoilage in units.2. Assume that the equivalent-unit cost of a spoiled unit is $10. Compute theamount of potential savings if all spoilage were eliminated, assuming thatall other costs would be unaffected. Comment on your answer.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
The following data, in physical units, describe a grinding process for January:
Work in process, beginning 19,000
Started during current period 50,000
To account for 169,000
Spoiled units 12,000
Good units completed and transferred out 132,000
Work in process, ending 25,000
Accounted for 169,000
Inspection occurs at the 100% completion stage. Normal spoilage is 5% of the good
units passing inspection.
Required:
1. Compute the normal and abnormal spoilage in units.
2. Assume that the equivalent-unit cost of a spoiled unit is $10. Compute the
amount of potential savings if all spoilage were eliminated, assuming that
all other costs would be unaffected. Comment on your answer.
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