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25 December, 08:12

Triboro Computer Systems, Inc., manufactures printer circuit cards. 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 $200,000 during the month. Work-in-process records revealed that 8,000 card units were started in January, 4,000 card units were complete, and 3,000 card units were spoiled as expected. Ending work-in-process card units are complete in respect to direct materials costs. Spoilage is not detected until the process is complete. What are the respective direct material costs per equivalent unit, assuming spoiled units are recognized or ignored

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Answers (1)
  1. 25 December, 08:28
    0
    recognized 25

    ignored 40

    Explanation:

    Direct materials are added at the inception of the production process,

    so the started units are the equivalent units

    equivalent units 8,000

    cost: 200,000

    cost per equivalent units = 200,000/8,000 = $25

    When recognize:

    We calculate for all the units, and then recognize a loss for the spoilage, we don't capitalized in the other units. We recognize the loss.

    When ignored

    This means the cost of the spoilage is capitalize on the remaining units, it doesn't recognize a loss, is ignored and charge into the other units.

    8000 - 3,000 = 5,000

    200,000 / 5,000 = 40
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