(Appendix) Spoilage with a Salvage Value in a Process Cost System with a Fifo Cost Flow Assumption.

Plastico Furniture Company uses a process cost system with a fifo cost flow assumption to account for the production of plastic chairs, which are 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 end of the production process in the Finishing Department. Good units are transferred to Finished Goods Inventory, and spoiled units are transferred to Spoiled Goods Inventory. Spoiled units are inventoried at their salvage value of $12 each, and the unrecoverable cost of spoilage is charged to Factory Overhead Control. Data related to September operations in the Finishing Department are: LO6 Units in beginning inventory (80% materials, 40% labor, 40%overhead).

Units received from Cutting Department thisperiod.

Units transferred to the Finished Goods inventory thisperiod.

Units transferred to Spoiled Goods Inventory thisperiod.

Units in ending inventory (100% materials, 60% labor, 60% overhead).'.

Beginning Inventory Costs charged to the department:

Cost from precedingdepartment. $14,160 Materials. 1,210 Labor. 1,300 Factoryoverhead. 3,250 1,200 6,000 5,000 700 1,500 Added This Period

$72,000 6,240 12,240 30,600 Required:

(1) Prepare a cost of production report for the Finishing Department based on the data presented for September.

(2) Prepare the appropriate general journal entry to record the transfer of cost out of the Finishing Department this period.