FIFO method, spoilage, working backward. The Cooking Department of Spicer Inc. uses a process-costing system. Direct materials are added at the beginning of the cooking process.

Conversion costs are added evenly during the cooking process. Consider the following data for the Cooking Department of Spicer Inc. forJanuary:

Physical Units Direct Materials Conversion Costs Work in process,January 1* 10,000 $ 264,000 $ 36,000 Started in January 74,000 Good units completed and transferred out duringJanuary 61,000 Spoiled units ' 8,000 Work in process,January 3D 15,000 Costs added duringJanuary $1,776,000 $1,130,400 Cost per equivalent unit ofwork done in January $ 24 $ 14.40 Degree of completion: direct materials, 100%; conversion costs, 25%

Degree of completion: WIP ending; direct materials 100%; conversion cost 80%

Spicer uses the FIFO method of process costing. Inspection occurs when production is 100%

completed. Normal spoilage is 11 % of good units completed and transferred out during the current period.

Instruction Form pairs ofstudents to complete the following requirements.

Required 1. For each cost category, compute equivalent units of work done in the current period

(January).

2. For each cost category, compute equivalent units of work done to complete beginning work-in-process inventory, to start and complete new units, for normal and abnormal spoilage units, and to produce ending work-in-process inventory.

3. For each cost category, calculate the percentage of completion of ending work-in-process inventory.

4. Summarize total costs to account for, and assign these costs to units completed (and trans¬

ferred out), normal spoilage, abnormal spoilage, and ending work in process.