Lester Company makes metal products and has a forging department.In this department, materials are added at the beginning of the process and conversion takes place uniformly. At the start of November 2011, the forging department had 20,000 units in beginning work in process, which are 100% complete for materials and 40% complete for conversion costs. An additional 10,000 units are started in the department in November, and 30,000 units remain in work in process at the end of the month. These unfinished units are 100% complete for materials and 70% complete for conversion costs. The forging department had 15,000 spoiled units in November. Normal spoilage is 12% of good units. The department's costs for the month of November are as follows: Beginning WIP Costs Incurred during period, Direct materials costs USD-64,000 & USD-200,000, Conversion costs USD-102,500 & 1,000,000. 1) Compute the normal and abnormal spoilage in units for November, assuming the inspection point is at ( A) the 30% stage of completion, (B) the 60% stage of completion, and (C) the 100% stage of completion. 2) Refer to your answer in requirement 1. Why are three different amounts of normal and abnormal spoilage at different inspection points ? 3) Now assume that the forging department inspects at the 60% stage of completion. Using the wighted average method, calculate the cost of units transferred out, the costs of abnormal spoilage, and the cost of ending inventory for the forging department in November.

Answer rating: 100% (QA)

Solution 1 Statement of Equuivalent Units of Production At the end of month of November 2011 Particular Equivalent Production Process quantity Process ... View the full answer