Question

Giddings Pharmaceutical Company is a maker of drugs for high blood pressure and uses a process costing system. The following information pertains to the final department of Giddings's blockbuster drug called Solcax. Beginning work-in-process (40% completed) Transferred-in Normal spoilage Abnormal spoilage Good units transferred out Ending work-in-process (1/3 completed) Conversion costs in beginning inventory Current conversion costs 725 units 3,700 units 385 units 185 units 3,300 units 555 units $2,321 $6,600 Giddings calculates separate costs of spoilage by computing both normal and abnormal spoiled units. Normal spoilage costs are reallocated to good units and abnormal spoilage costs are charged as a loss. The units of Solcax that are spoiled are the result of defects not discovered before inspection of finished units. Materials are added at the beginning of the process. Using the weighted-average method, answer the following question: What are the unit conversion costs? Multinle Choice

Answer 1

			Physical	Conversion
UNITS			Units	Equiv. Units
Units to account for:
Beginning work in process	725
Started in production	3700
Total Units to account for	4425
Units Accounted for:
Completed and transferred	3300	3300
Normal Spoilage		385	385
Abnormal Spoilage		185	185
Ending work in process	555	185
Total Units to be accounted for	4425	4055
				Conversion
COSTS				Cost
Costs to account for:
Beginning work in process		2321
cost added during the period		6,600
Total cost to account for		8,921
Divided by: Total EUP		4055
Cost per equivalent unit		2.2
Answer is $ 2.20