Question

Triboro Computer​ Systems, Inc., manufactures printer circuit cards. All direct materials are added at the inception of the production process. During​ January, the accounting department noted that there was no beginning inventory. Direct materials purchases totaled​ $200,000 during the month.​ Work-in-process records revealed that​ 8,000 card units were started in​ January, 4,000 card units were​ complete, and​ 3,000 card units were spoiled as expected. Ending​ work-in-process card units are complete in respect to direct materials costs. Spoilage is not detected until the process is complete. What are the respective direct material costs per equivalent​ unit, assuming spoiled units are recognized or​ ignored

Answer 1

Answer:

recognized 25

ignored 40

Explanation:

Direct materials are added at the inception of the production process,

so the started units are the equivalent units

equivalent units 8,000

cost: 200,000

cost per equivalent units = 200,000/8,000 = $25

When recognize:

We calculate for all the units, and then recognize a loss for the spoilage, we don't capitalized in the other units. We recognize the loss.

When ignored

This means the cost of the spoilage is capitalize on the remaining units, it doesn't recognize a loss, is ignored and charge into the other units.

8000 - 3,000 = 5,000

200,000 /5,000 = 40