Question 1

Real Labs manufactures small tables in its Processing Department. Direct materials are added at the initiation of the production cycle and must be bundled in single kits for each unit. Conversion costs are incurred evenly throughout the production cycle. Before inspection, some units are spoiled due to undetectable materials defects. Spoiled units generally constitute 3% of the good units. Data

for December 2017 are as follows:
WIP, beginning inventory 12/1/2017 Direct materials (100% complete) Conversion costs (80% complete)	22,700 units
Started during December	76,300 units
Completed and transferred out 12/31/2017	72,100 units
WIP, ending inventory 12/31/2017 Direct materials (100% complete) Conversion costs (60% complete) Costs for December: WIP, beginning Inventory:	18,100 units
Direct materials	$151,000
Conversion costs	76,900
Direct materials added	231,400
Conversion costs added	294,000

Real Labs uses a FIFO process-costing system.

Required: (Round to two places)

You must show your work for credit, and you must use a format in which your calculations can be followed for partial credit.

Use process costing to determine the equivalent units and cost per equivalent unit. Prepare necessary journal entries for normal and abnormal spoilage units.

1. Reconciliation of physical units
2. Compute Equivalent Units
3. Compute Total costs and Cost per Equivalent Units
4. Assign Costs to Units Completed and Units in Ending Inventory
5. Necessary journal entries