(Appendix) Spoilage Resulting from an Internal Failure in a Process Cost System with a Fifo Cost Flow Assumption. Handy Tool Company uses a process cost system with a fifo cost flow assumption to account for the production of its only product, which is manufactured in two departments. Units of product are started in the Fabricating Department and then transferred to the Finishing Department, where they are completed. Units are inspected at the 60% stage of conversion in the Fabricating Department and at the end of the production process in the Finishing Department. Materials are added at the beginning of the process in both departments. Units of product that are spoiled in the Fabricating Department have no salvage value; however, units found to be spoiled at the end of the Finishing Department process have a salvage value of $1 each. Good units are transferred from the Finishing Department to Finished Goods Inventory at cost, and spoiled units are trans¬ ferred to Spoiled Goods Inventory at their salvage value. The unrecoverable cost of spoilage in both depart¬ ments is viewed by management as an internal failure cost and charged to Factory Overhead Control. Data related to April are: LO6 Units in beginning inventory:

Fabricating Department (100% materials, 70% labor and overhead) Finishing Department (100% materials, 40% labor and overhead)...

Units started in process in Fabricating Department this period.

Units transferred from Fabricating Department to Finishing Department Units transferred to Finished Goods Inventory this period.

Units spoiled in process thisperiod.

Units in ending inventory:

Fabricating Department (100% materials, 40% labor and overhead) Finishing Department (100% materials, 25% labor and overhead)... Cost in beginning inventory:

Cost from precedingdepartment.

Materials.

Labor......

Factoryoverhead.

Cost added during the current period:

Materials.

Labor.

Factoryoverhead.

Fabricating Finishing 2,000 3,000 9,000 9,000 9,000 9,900 500 100 1,500 2,000

$ 6,100

$1,900 3,500 340 520 1,020 780 9,180 10,800 2,125 3,720 6,375 5,580 Required:

(1) Prepare a cost of production report for each department based on the data presented for April.

(2) Prepare the appropriate general journal entry to record the transfer of cost out of each department during April. Assume the company maintains separate work in process accounts for each manufacturing department.