Superio Ltd. uses process costing to determine its product costs. In its processing department, direct material A is added at the beginning of the process and direct material B is added when production is 90% complete. Conversion costs are added evenly throughout. The inspection point is at the 80% stage of production. Normal spoilage is 2% of all good units that pass inspection.

The following details are available for January production.

Beginning inventory Number of units 4,500 Direct materials cost $22,500 Conversion cost $13,000 Per cent completion 65%

Month of January activity

Number of units started 25,000 Direct material A cost $160,000 Direct material B cost $354,000 Conversion costs $560,600 Number of units completed 22,000 Ending inventory 7,000 Per cent completion of ending inventory 40%

The company uses the FIFO method. What is the cost of the abnormal spoilage for the month of January?

a) $1,393 b) $1,464 c) $1,592 d) $2,442