Prepare Production Cost Report and Show Cost Flows through Accounts FIFO Method: Mercantile Recovery Corporation has devised a process for converting garbage into liquid fuel. While the direct materials costs are zero, the operation requires the use of direct labor and overhead. The company uses a process costing system and keeps track of the production and costs of each period. At the start of the current period, there were 1,000 units in the work in process inventory. These units were 40 percent complete and were carried at a cost of $420. During the month, costs of $18,000 were incurred. There were 9,000 units started during the period, and there were 500 units still in process at the end of the period. The ending units were 20 percent complete.

Required:

a. Prepare a production cost report, using FIFO.

b. Show the flow of costs through T-accounts. Assume current period conversion costs are credited to "Various Payables."