Missing information?

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  • #183866
    Anonymous
    Inactive

    Where in the question does it say that ending inventory comprised one half of the total units of good output produced during the year?


    A department adds material at the beginning of a process and identifies defective units when the process is 40% complete. At the beginning of the period, there was no work in process. At the end of the period, the number of work in process units equaled the number of units transferred to finished goods. If all units in ending work in process were 66 and 2/3% complete, then ending work in process should be allocated

    a. 50% of all normal defective unit costs.

    b. 40% of all normal defective unit costs.

    c. 50% of the material costs and 40% of the conversion costs of all normal defective unit costs.

    d. None of the normal defective unit costs.

    Answer: A. The requirement is to determine the proper allocation of normal defective unit costs to the ending work in process. Normal defective unit costs are spread over the units of good output because the attaining of good units necessitates the appearance of normal spoiled units. The cost of the normal defective units is included in the total costs of the good equivalent units of output. Ending inventory comprised one half of the total units of good output produced during the year; therefore, it will bear 50% of the normal defective unit costs incurred during the year.

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  • #517718
    Anonymous
    Inactive

    Very confusing wording, but it think…

    “At the end of the period number of work in process units equaled the number of units transferred to finished goods.”

    ^66 units in ending WIP + 66 units transferred to finished goods. Hence 50%.

    It may be helpful to draw a t-account of WIP.

    I may be wrong though. I dunno.

    #517748
    Anonymous
    Inactive

    Very confusing wording, but it think…

    “At the end of the period number of work in process units equaled the number of units transferred to finished goods.”

    ^66 units in ending WIP + 66 units transferred to finished goods. Hence 50%.

    It may be helpful to draw a t-account of WIP.

    I may be wrong though. I dunno.

    #517720
    infinity
    Member

    “At the end of the period, the number of work in process units equaled the number of units transferred to finished goods.”

    Helps to draw the T-account:

    Beginning WIP 0

    Additional WIP 100%

    COGM 50%->transferred to Finished Goods

    Ending WIP 50%

    BEC 74

    Never give up, never surrender.

    #517750
    infinity
    Member

    “At the end of the period, the number of work in process units equaled the number of units transferred to finished goods.”

    Helps to draw the T-account:

    Beginning WIP 0

    Additional WIP 100%

    COGM 50%->transferred to Finished Goods

    Ending WIP 50%

    BEC 74

    Never give up, never surrender.

Viewing 4 replies - 1 through 4 (of 4 total)
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