Spoilage costs allocated to ending work in process are larger by which method and by how much

ACCOUNTING

Multiple Choice

Astoria Computer Systems, Inc., manufactures printers. All direct materials are added at the inception of the production process. During January, the accounting department noted that there was no beginning inventory. Direct materials purchases totaled $100,000 during the month. Work-in-process records revealed that 4,000 cards were started in January, 2,000 cards were complete, and 1,500 units were spoiled as expected. Ending work-in-process units are complete in respect to direct materials costs. Spoilage is not detected until the process is complete.

Spoilage costs allocated to ending work in process are larger by which method and by how much?

a. When spoiled units are recognized by $2,500

b. When spoiled units are recognized by $4,250

c. When spoiled units are ignored by $7,500

d. When spoiled units are recognized by $7,500

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