James Automotive Group is a maker of engines for high performance cars and uses a process costing system.The following information pertains to the final department of James' outstanding engine called "Superior-1".
James calculates separate costs of spoilage by computing both normal and abnormal spoiled units.Normal spoilage costs are reallocated to good units and abnormal spoilage costs are charged as a loss.The units of "Superior-1" that are spoiled are the result of defects not discovered before inspection of finished units.Using the weighted-average method,what are the total conversion costs in ending inventory?
A)$22,500.
B)$40,000.
C)$40,500.
D)$180,000. (300 x.3)x $450 = $40,500

Question

James Automotive Group is a maker of engines for high performance cars and uses a process costing system.The following information pertains to the final department of James' outstanding engine called "Superior-1". 
James calculates separate costs of spoilage by computing both normal and abnormal spoiled units.Normal spoilage costs are reallocated to good units and abnormal spoilage costs are charged as a loss.The units of "Superior-1" that are spoiled are the result of defects not discovered before inspection of finished units.Using the weighted-average method,what are the total conversion costs in ending inventory?
A)$22,500. 
B)$40,000. 
C)$40,500. 
D)$180,000. (300 x.3)x $450 = $40,500

Quizplus · Accepted Answer

The question asks for the total conversion costs in ending inventory using the weighted-average method. We can calculate the total conversion costs by multiplying the number of equivalent units of production for conversion costs by the cost per equivalent unit. From the given information, we know that the equivalent units for conversion costs are 300, and the cost per equivalent unit is $450. Therefore, the total conversion costs in ending inventory would be (300 x 0.3) x $450 = $40,500. The correct answer is C.

James Automotive Group Is a Maker of Engines for High