Giddings Pharmaceutical Company Is a Maker of Drugs for High

question 50

Multiple Choice

Giddings Pharmaceutical Company is a maker of drugs for high blood pressure and uses a process costing system. The following information pertains to the final department of Giddings's blockbuster drug called Solcax. $\begin{array}{lr}\text { Beginning work-in-process }(40 \% \text { completed) } & 800 \text { units } \\\text { Transferred-in } & 4,000 \text { units } \\\text { Normal spoilage } & 400 \text { units } \\\text { Abnormal spoilage } & 200 \text { units } \\\text { Good units transferred out } & 3,600 \text { units } \\\text { Ending work-in-process }(1 / 3 \text { completed) } & 600 \text { units }\\\text { Conversion costs in beginning inventory } & \$ 2,560 \\\text { Current conversion costs } & \$ 6,900\end{array}$ Giddings 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 Solcax that are spoiled are the result of defects not discovered before inspection of finished units. Materials are added at the beginning of the process. Using the weighted-average method, answer the following question:
What are the equivalent units for conversion costs?

• A) 4,200 units.
• B) 4,800 units.
• C) 4,000 units.
• D) 4,400 units.

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