1. The following information is available for the Crown for the month of January. All materials are added at the start of production. Spoilage in excess of 10% of completed units is abnormal and is detected by the final inspection at the end of the process.

Beginning work in process(80% complete)................... 8,000 units

Started........................................................................ 35,000 units

Ending work in process(55% complete)....................... 15,000 units

Transferred out............................................................ 24,500 units

Beginning work-in-process costs:

Materials............................................................. $14,000

Conversion.......................................................... 38,200

Current costs:

Materials............................................................. $50,750

Conversion.......................................................... 173,130

Assume that Crown uses the FIFO method.

Required:

1. What is the total cost of the units transferred out, the cost of ending inventory?
2. How much could Crown reasonably expect to save by reducing spoilage?