Omaha Foods manufactures corn meal in a continuous, mass production process. Corn is added at the be- ginning of the process. Normal losses are minimal and abnormal losses infrequently occur when foreign materials are found in the corn meal. Routine inspection occurs at the 80 percent completion point as to conversion. During May, a machine malfunctioned and dumped salt into 8,000 pounds of corn meal. This abnormal loss occurred when conversion was 70 percent complete on those pounds of product. The error was immediately noticed, and those pounds of corn meal were pulled from the production process. Two thousand additional pounds of meal were detected as unsuitable at the routine inspection point; this amount was considered within normal limits. Production data for the month follow.

Beginning WIP Inventory (85% complete)	40,000 lbs
Started during the month	425,000 lbs
Ending WIP Inventory (25% complete)	10,000 lbs

Required

a. Determine the number of Equivalent units for direct material and for conversion, assuming a FIFO cost flow.

b. If the costs per Equivalent units are $0.08 and $0.15 for direct material and conversion, respectively, what is the cost of the ending WIP Inventory?

c. What is the cost of abnormal loss? How is this cost treated in May?