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:

Business Rules

Specific guidelines, criteria, or conditions defined within a business to govern decisions, processes, and operations in alignment with organizational goals.

Employee Mistakes

Errors or misjudgments made by employees during the course of their work.

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A financial statement issued by a company every three months, providing a snapshot of its performance, including revenues, expenses, and profits.