The following data, in physical units, describe a grinding process for January:
|
Work in process, beginning
|
19,200
|
|
Started during current period
|
185,900
|
|
To account for
|
205,100
|
|
Spoiled units
|
12,400
|
|
Good units completed and transferred out
|
167,500
|
|
Work in process, ending
|
25,200
|
|
Accounted for
|
205,100
|
Inspection occurs at the 100% completion stage. Normal spoilage is 4% of the good units passing inspection.
Requirements
1. Compute the normal and abnormal spoilage in units.
2. Assume that the equivalent-unit cost of a spoiled unit is $8.
Compute the amount of potential savings if all spoilage were eliminated, assuming that all other costs would be unaffected. Comment on your answer.
Requirement 1. Compute the normal and abnormal spoilage in units.
Normal Spoilage ___ units
Abnormal Spoilage ___ units
Requirement 2. Assume that the equivalent-unit cost of a spoiled unit is $9. Compute the amount of potential savings if all spoilage were eliminated, assuming that all other costs would be unaffected.
Abnormal Spoilage
Normal Spoilage
Potential Savings