Question

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 undetectable materials defects. Inspection occurs when units are​ 60% converted. Spoiled units generally constitute​ 6% of the good units. Data for December 2017 are as​ follows: ​WIP, beginning inventory​ 12/1/2017 ​22,500 units Direct materials​ (100% complete) Conversion costs​ (75% complete) Started during December ​ 76,700 units Completed and transferred out​ 12/31/2017 ​72,300 units ​WIP, ending inventory​ 12/31/2017 ​18,400 units Direct materials​ (100% complete) Conversion costs​ (65% complete) Costs for​ December: ​ WIP, beginning​ Inventory: Direct materials ​$159,000 Conversion costs ​77,800 Direct materials added ​232,400 Conversion costs added ​293,000 What is the number of total spoiled​ units? A. ​4,162 units B. ​4,338 units C. ​8,500 units D. ​10,435 units

Answer 1

Option (C) is correct.

Step-by-step explanation:

Given that,

Data for December 2017,

WIP, beginning inventory​ 12/1/2017 = 22,500 units

Started during December = ​ 76,700 units

Units Completed and transferred out​ 12/31/2017 = 72,300

Ending inventory​ 12/31/2017 = ​18,400 units

Therefore,

Number of total spoiled​ units:

= (Beginning inventory + Started during December) - (Units Completed and transferred out​ + Ending inventory​)

= (22,500 + 76,700) - (72,300 + 18,400)

= 99,200 - 90,700

= 8,500 units