Consider the following data for November 2012 from Gray Manufacturing Company, which makes silk pennants and uses a process- costing system. All direct materials are added at the beginning of the process, and conversion costs are added evenly during the process. Spoilage is detected upon inspection at the completion of the process. Spoiled units are disposed of at zero net disposal value. Gray Manufacturing Company uses the FIFO method.

Physical units Direct Conversion

(Pennants) Materials Costs

Work in process, November 1[a] 1000 $1,423 $1,110

Started in November 2012 ?

Good units completed and transferred

Out during November 2012 9,000

Normal Spoilage 100

Abnormal Spoilage 50

Work in process, November 30[b] 2,000

Total costs added during November 2012 $12,180 $27,750

Compute Equivalent units for direct materials and conversion costs and assign total costs to units completed and transferred out, including normal spoilage and abnormal spoilage. (Do steps 1-5)

[a]Degree of completion: direct materials, 100%; conversion costs, 50%.

[b]Degree of completion: direct materials, 100%; conversion costs, 30%.