Question

Astoria Computer Systems, Inc., manufactures printers. All direct materials are added at the inception of the production process. During January, the accounting department noted that there was no beginning inventory. Direct materials purchases totaled $100,000 during the month. Work-in-process records revealed that 4,000 cards were started in January, 2,000 cards were complete, and 1,500 units were spoiled as expected. Ending work-in-process units are complete in respect to direct materials costs. Spoilage is not detected until the process is complete.What is the direct material cost assigned to good units completed when spoilage units are recognized?

a. $50,000b. $100,000c. $80,000d. $87,500

Answer 1

a. $50,000

Step-by-step explanation:

4,000 cards

if the spoilage units are recognized then, we will distribute the 100,000 over the 4,000 started units and the defective units will be assign to manufacturing overhead control

100,000 / 4,000 = 25 direct materials per unit

complete units 2,000 card

2,000 x 25 = 50,000

50,000