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Warrior Company produces a product in a process cost environment. The following information is provided for the first department in the process. Material is added at the beginning of the process and the inspection point is at the end of the process. All spoilage is assumed to come from the units started during the period. Any spoilage up to ten percent of the good completed units is considered normal. Costs Work-in-process inventory, May 1 Beginning material $14,000 Beginning conversion 20,000 May costs added: Direct Materials 58,000 Conversion 104,500 Units Work-in-process inventory, May 1 (75% complete) 2,000 Started Completed 8,000 7,500 Work-in-Process Inventory, May 31 (60% complete) 1,700

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Warrior Company has hired you for help with the following. First, recommend a process costing system that prices cost of completed units, ending work-in-process, and spoilage. The company prefers accuracy. Second, how much could Warrior Company expect to save by eliminating errors? Third, Warrior Company is looking at an investment that will let them detect spoiled units halfway through the conversion process. The investment will add $5 of conversion to each unit. Should the company make the investment?

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