Question

ICP 2- Spoiled Inc. Spoiled Inc. manufactures vanity mirrors for retail clothing outlets. Each mirror goes through two processes: cutting and finishing. In the cutting process, large sheets of mirrored glass are cut to a standard size and the edges are smoothed and bevelled before the cut mirrors are transferred to the finishing department. In the finishing process, a protective plastic edging and rear supports are placed on the cut mirrors Because the process of cutting is delicate, there is a significant amount of spoilage expected at this stage. The company expects normal spoilage to be 15% of the good units that pass through inspection. Thus, the mirrors are inspected for cutting flaws prior to the smoothing and bevelling of the edges. Mirrors with flaws are discarded. It is estimated that the inspection occurs when the mirrors are 40% through the cutting department process for conversion costs All the materials are added at the beginning of the process The following is the summary data for the most recent month in the cutting department: Physical Direct Conversion units materials costs WIP, beginning Percentage of completion, beginning WIP Started during the month Costs added during the month Good units completed and $ 11,500 50% 2,300 $ 9,200 100% 20,200 $ 81,800 $ 200,000 transferred out 18,000 1,500 WIP, ending Percentage of completion, ending WIP 100% 30%

Answer 1

PART-1 - Cost Calculation Under Weighted Average Cost Flow Assumptions

Weighted Average - Physical Flow of Units
Material Cost Analysis	Units	Equivalent Units
WIP	2300
Units Started during the month	20200
Units to Account for	22500
Unit Completed & Transferred	18000	18000
Normal Spoilage -15%	2700	2700
Abnormal Spoilage	300	300
WIP Ending	1500	1500

Here the Total cost for manufacturing Vanity Mirrors are-

Materials Cost+ Conversation Cost=(9200+81800)+(11500+200000)

                                                        =91000+211500=$302500

Weighted Average - Equivalent units
Particulars	Units	Cost Per Unit	Total Cost
Completed and Transferred	18000	13.44	241920
Normal Spoilage	2700	13.44	36288
Abnormal Spoilage	300	13.44	4032
Work In Process Ending	1500	13.44	20160
Totals	22500		302400

Journal Entries
Process of Cutting Vanity Mirrors	241920
Normal Spoilage A/C	36288
To Finishing Of Vanity Mirrors		278208