Universal Automotive Group Is a Maker of Engines for High

question 4

Multiple Choice

Universal 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 manufacturing for Universal's most popular engine, the "Atomic 8". $\begin{array}{lr}\text { Beginning work-in-process ( } 40 \% \text { completed) } & 400 \text { units } \\\text { Transferred-in } & 1,600 \text { units } \\\text { Normal spoilage } & 100 \text { units } \\\text { Abnormal spoilage } & 100 \text { units } \\\text { Good units transferred out } & 1,400 \text { units } \\\text { Ending work-in-process }(25 \% \text { completed) } & 400 \text { units }\\\text { Conversion costs in beginning inventory } & \$ 180,500 \\\text { Current conversion costs } & \$ 728,218\end{array}$ Universal Automotive Group 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 the Atomic 8 that are spoiled are the result of defects not discovered before inspection of finished units. Using the weighted-average method, answer the following question:
What are the total conversion costs of abnormal spoilage?

• A) $60,518.
• B) $53,454.
• C) $64,908.
• D) $58,314.

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Definitions:

Expectations

Beliefs or anticipations about the way events or situations are supposed to unfold in the future.

Generativity

A stage in Erik Erikson's theory of psychosocial development usually occurring during middle adulthood, focusing on the desire to produce something that makes a difference to society.

Altruism

The principle or practice of concern for the welfare of others, often characterized by selfless acts or sacrificing personal gain for the benefit of others.

Industry

The production of goods or services within an economy, or more specifically, a sector that produces a particular type or group of products.