Cost Accounting Quiz
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COST ACCUMULATION SYSTEMS
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Lambda Corporation uses weighted-average process costing in its Blending Department. During September, the department had the following activity: Beginning WIP: 4,000 units (25% complete for conversion costs, $22,000 total cost); Units started: 36,000; Units completed: 35,000; Ending WIP: 5,000 units (60% complete for conversion costs); Current period costs: $198,000. Materials are added at the beginning of the process.
If the company discovers that 1,000 of the completed units should be classified as defective units (which reduces their transfer value by 40%), what is the impact on the cost allocation between transferred units and ending WIP?
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