ACME Incorporated has five processing departments through which all product flows. Information for Department 2 for the most recent month is as follows:

Beginning work in process inventory in Department 2 consisted of 3,000 units that were 60% complete. During the month, 61,000 units were received from Department 1. 58,000 good units were completed and transferred to Department 3. When the units are 25% complete, they are inspected and all material is then added to the good units. At the end of the month, 5,000 units in Department 2 were 75% complete. Remaining units were considered normal spoilage. Normal spoilage is charged to manufacturing overhead.

Required: 1. Prepare the first portion of the production report for Department 2: Quantity Schedule and the Equivalent Units of Production. 2. Which costing system is ACME Incorporated using? Why is that costing system appropriate for this company?