Normal spoiled units with a saivage vaiue Dumplin Enterprises produces food products for restaurants and other commercial establishments. The second process center in the manufac- ture of "nip soup," a company specialty, is Cooking. Basic broth is transferred into Cooking where additional items are added and the mixture simmered for 6 hours. The broth transferred in must satisfy demanding criteria on fat content and flavor. Unacceptable units are sold for $.55 per unit before any material is added or conversion is done in Cooking.

During September there was no beginning inventory; 6,000 units were transferred in; 800 units did not meet quality control criteria; and 1,000 were in ending inventory with all materials and 60% conversion. The company reports a separate lost unit cost. September production costs include:

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Preceding department $15,000 Direct material 6,240 Direct labor... 7,680 Manufacturing overhead 4,320