Exercise 8: Process Costing and Spoilage Nation Lovers PLC produces several items to be used as replacement tools for various types of machineries. The product costing system for NL which is used as spare part for construction machineries has a single direct cost category (direct materials) and a single indirect cost category (conversion costs). All direct materials are added at the beginning of the process but conversion costs are added evenly during the cycle. Some units are spoiled as a result of defects only detectable at inspection of finished units. Normally, the spoiled units are 10% of the finished output of good units. Summary data for January 20x7 are given below. Physical Units for January 20x7: WIP January 1, 20x7....... .........3,000 units Direct materials 100% complete Conversion costs 60% complete Started during January........... ..... 9,000 units Good units completed and transferred out................. .8,000 units WIP inventory, January 31, 20x7.......... ... 3,000 units Direct materials (100% complete) Conversion costs (50% complete) Total Costs for January 20x7: WIP January 1, 20x7 Direct materials.. .... Br.15, 000 Conversion costs......... ..9,000..........Br.24, 000 Direct material costs added in January............ .....67,500 Conversion costs added in January...... 51,000 Total costs to account for......... ... 142,500 Required: Prepare the Cost of Production Report and journalize the necessary entries under (a) WA Method &(b) FIFO Method