(AlCPA) Two department, spoilage, and no separate spoilage cost The Dexter Production Company manufactures a single product. Its operations are a continuous production process carried on in two departments - Machining and Finishing. Materials are added to the product in each department without increasing the number of units produced.

For the month of June the company records indicate the following production data for each department. 

The units spoiled in production had no scrap value and were 50 percent completed as to materials, labor, and overhead. The company's policy is to treat spoiled units in production as a separate element of cost in the department in which the spoilage occurs. Cost records showed the following charges for the month of June:

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Units in process, June 1 Units transferred in from preceding department Units started in production Units completed and transferred out Units in process, June 30 Units spoiled in production * Percent of completion of units in process, June 30: Materials Labor Overhead Machining Finishing Dept. Dept. 0 0 0 60,000 80,000 0 60,000 50,000 *20,000 8,000 0 2,000 100% 100% 50% 70% 25% 70%