Warrior Company produces a product in a process cost environment. The following information is provided for the first department in the process. Material is added at the beginning of the process and the inspection point is at the end of the process. All spoilage is assumed to come from the units started during the period. Any spoilage up to ten percent of the good completed units is considered normal.

Costs
Work-in-process inventory, May 1
Beginning material	$14,000
Beginning conversion	20,000
May costs added:
Direct Materials	58,000
Conversion	104,500

Units
Work-in-process inventory, May 1 (75% complete)	2,000
Started Completed	8,000 7,500
Work-in-Process Inventory, May 31 (60% complete)	1,700

Required:

Warrior Company has hired you for help with the following. First, recommend a process costing system that prices cost of completed units, ending work-in-process, and spoilage. The company prefers accuracy. Second, how much could Warrior Company expect to save by eliminating errors? Third, Warrior Company is looking at an investment that will let them detect spoiled units halfway through the conversion process. The investment will add $5 of conversion to each unit. Should the company make the investment?

Answer rating: 100% (QA)

Production Work Sheet Production Flow Physical Units Direct materials Con... View the full answer