Use the information below to answer the following question(s).Waldorf Computer Systems, Inc.manufactures computer memory cards, and uses process-costing.All direct materials are added at the inception of the production process.The accounting department noted that there was no beginning inventory for January.Direct Materials purchases totalled $150,000 during the month.Work-in-process records revealed that 7,500 cards were started in January, 4,500 cards were complete, and 1,500 units were spoiled as expected.Ending work-in-process units are complete in respect to direct materials costs.Inspection occurs at the end of the process.
-What is the Waldorf Computer Systems Inc.direct material cost assigned to good units completed when spoilage units are recognized in the total equivalent units?
A)$150,000
B)$120,000
C)$112,500
D)$90,000
E)$77,000

Question

Quizplus · Accepted Answer

To determine the direct material cost assigned to good units completed, we need to calculate equivalent units of production for direct materials.

Equivalent units of production for direct materials:
Completed units: 4,500
Ending work-in-process units: 3,000 (7,500 total units - 4,500 completed units)
Total equivalent units: 7,500

Since 1,500 units were spoiled as expected, they are not included in the total equivalent units. Therefore, the direct material cost assigned to good units completed is:

Direct materials cost assigned to good units completed = (Direct materials purchases / Total equivalent units) x Completed units
Direct materials cost assigned to good units completed = ($150,000 / 7,500) x 4,500
Direct materials cost assigned to good units completed = $120,000

Therefore, the answer is B.

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