Reference no: EM132792137

Question - THE FOLLOWING INFORMATION APPLIES TO QUESTIONS

Astoria Computer Systems, Inc., manufactures printers. 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 P100,000 during the month. Work-in-process records revealed that 4,000 cards were started in January, 2,000 cards were complete, and 1,500 units were spoiled as expected. Ending work-in-process units are complete in respect to direct materials costs. Spoilage is not detected until the process is complete.

1. What are the respective direct material costs per equivalent unit, assuming spoiled units are recognized or ignored?

a. P20.00; P35.00

b. P25.00; P40.00

c. P30.00; P45.00

d. P35.00; P50.00

2. What is the direct material cost assigned to good units completed when spoilage units are recognized?

a. P50,000

b. P100,000

c. P80,000

d. P87,500

3. What is the cost transferred out assuming spoilage units are ignored?

a. P87,500

b. P80,000

c. P50,000

d. P77,500

4. What are the amounts allocated to the work-in-process ending inventory assuming spoilage units are recognized and ignored, respectively?

a. P20,000; P24,500

b. P30,000; P34,250

c. P12,500; P20,000

d. P37,500; P40,000

5. Spoilage costs allocated to ending work in process are larger by which method and by how much?

a. When spoiled units are recognized by P2,500

b. When spoiled units are recognized by P4,250

c. When spoiled units are ignored by P7,500

d. When spoiled units are recognized by P7,500