Week 4 option 1 assignment Traverse Cooling, Inc. Traverse Thermal produces Insulated Coolers. This is a continous Process enviroment. Direct Material are added at the beginning of the process. Conversion costs are adding all during the manufacturing process. The manufacturing has a computer aided quality control step which rejects 1% of the production for defects. Summary data for this period are as follows: Physical Units Direct Material Conversion Costs WIP, Beginning 10,000 235,000 Degree of completion, beginning WIP 100% 107,000 50% Started this period 14,500 TOTAL UNITS TO ACCOUNT FOR: Good units completed and transferred 20,200 WIP, ending inventory 3,500 TOTAL UNITS ACCOUNTED FOR: Degree of completion of ending WIP Total costs added this period Normal spoliage as a % of good units Degree of completion of normal goods Degree of completion of abnormal goods Required: 1.0% 100% 60% $ 450,000 $ 250,000 100% 100% 100% 100% 1). Compute the units to account for, number of normal spoilage and number of abnormal spoilage. 2). Compute the Equivalent Units. 3). Compute the cost per unit and completed and transferred out of the process. 4). Compute the total costs to account for, compute cost per equivalent unit, and assign costs. Week 4 option 1 assignment Step 1: Determine the physical flow of Units Weighted average Costing Physical Units Direct Material Conversion Costs Total WIP, Beginning Degree of completion, beginning WIP Started this period TOTAL UNITS TO ACCOUNT FOR: Good units completed and transferred WIP, ending inventory TOTAL UNITS ACCOUNTED FOR: Degree of completion of ending WIP Total costs added this period Step Two compute Spoilage: Identify the number of normal and abnormal spoilage Total Spoilage Normal Spoilage= Abnormal Spoilage = Week 4 option 1 assignment Step 3: compute equivalent Units of Production Weighted eqivalent units Total Production costs Direct Material Conversion Costs Notes WIP, beginning started during the period to Account for Goods units completed and transferred Normal spoilage Abnormal Spoilage (Degree of completion for abnormal spoilage: Direct material 100%, Conversion Costs 100%) WIP, ending Accounted for Equivalent units for WIP Weighted eqivalent units WIP, beginning costs added in current period total costs to account for Divide by equiv. units of work done to date cost per equivalent unit STEP 5 Assign and Reconcile Costs good units completed and transferred out Total Production costs Direct Material Conversion Costs Costs before adding normal spoilage Normal Spoilage Total cost of good units completed and tranferred out Abnormal spoilage WIP, Ending Total costs accounted for