Question: Empire Forging produces small plumbing valves January data for its

Empire Forging produces small plumbing valves. January data for its valve-making process follow. Beginning WIP was 60,000 units. Good units completed and transferred out during the current period totaled 420,000. Ending WIP as 68,000 units. Inspection occurs at the 100% stage of completion with respect to conversion costs, which are incurred evenly throughout the process. Total spoilage is 36,000 units. Normal spoilage is 12,600 units. Direct materials are added at the beginning of the process.

A. Compute abnormal spoilage in units for January.
B. Compute the number of units started in January.
C. Calculate the percentage of units produced that is considered normal spoilage, and calculate the total percentage of units spoiled this period. List several potential business risks when spoilage rates increase dramatically.
D. Provide arguments for the manager of the valve department about the trade-offs between investing in quality improvements and incurring the costs of undetected spoiled units.

Sale on SolutionInn
  • CreatedJanuary 26, 2015
  • Files Included
Post your question