Question
Tidy Office Supplies manufactures desk organizers in its Processing Department. Direct materials are added at the beginning of the process and conversion costs are incurred
Tidy Office Supplies manufactures desk organizers in its Processing Department. Direct materials are added at the beginning of the process and conversion costs are incurred evenly throughout the production cycle. Inspection takes place at the end of the process and spoiled units generally constitute 4% of the good units.
Data provided for February are as follows:
WIP, beginning inventory February 1 | 25,000 units |
Direct materials (100% complete) | |
Conversion costs (50% complete) | |
Started during February | 82,000 units |
Completed and transferred out | 81,000 units |
WIP, ending inventory February 28 | 15,000 units |
Direct materials (100% complete) | |
Conversion costs (25% complete) | |
Costs: | |
WIP, beginning inventory: | |
Direct materials | $150,000 |
Conversion costs | 44,000 |
Direct materials added | 209,916 |
Conversion costs added | 109,893 |
What costs would be associated with normal and abnormal spoilage, respectively, using the FIFO method of process costing?
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