Fish Fillet Incorporated Obtains Fish and Then Processes Them into Frozen

question 91

Multiple Choice

Fish Fillet Incorporated obtains fish and then processes them into frozen fillets and then prepares the frozen fish fillets for distribution to its retail sales department. Direct materials are added at the initiation of the cycle. Conversion costs are incurred evenly throughout the production cycle. Before inspection, some fillets are spoiled due to undetectable defects. Inspection occurs when units are 40% converted. Spoiled fillets generally constitute 6% of the good fillets. Data for April 2017 are as follows:

What cost is allocated to abnormal spoilage using the weighted-average process-costing method? (Round any cost per unit calculations to the nearest cent.)

• A) $ 0
• B) $4610
• C) $2091
• D) $2106

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Definitions:

Applied Overhead

Applied overhead refers to the estimated amount of overhead costs allocated to particular cost objects based on a predetermined rate, used to assign indirect costs to products or services.

Variance Measured

The process of determining the difference between expected and actual performance, costs, or revenues for the purpose of financial analysis and control.

Variable Overhead

Overhead costs that fluctuate with the level of production output, such as utilities for machinery or costs for raw materials.

Direct Labour Hour

A measure of the amount of time a worker spends on direct production activities.