Cracked Inc. manufactures a single product and uses the FIFO method of process costing. Direct materials are added at the beginning of the production process. Conversion costs are incurred evenly throughout production. Inspection takes place at the end of the production process. After inspection, some units are spoiled due to defects. Spoiled units generally constitute 2% of the good units transferred out (this is normal spoilage). Assume all spoilage is from the current month's production. Data provided for September is as follows:

Cracked Inc. manufactures a single product and uses the FIFO method of process costing. Direct materials are added at the beginning of the production process. Conversion costs are incurred evenly throughout production. Inspection takes place at the end of the production process. After inspection, some units are spoiled due to defects. Spoiled units generally constitute 2% of the good units transferred out (this is normal spoilage). Assume all spoilage is from the current month's production. Data provided for September is as follows:

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

What cost would be associated with normal spoilage and abnormal spoilage
respectively, in September? (Round the cost per equivalent unit to the nearest
penny.)
a. $6,756.40; $4,927.60
b. $5,486.40; $6,197.60
c. $6,177.28; $5,506.72
d. $4,673.60; $7,010.40
e. $6,969.04; $6,730.78
f. $3,486.60; $2,457.00
g. $5,943.60; $5,740.40
h. None of the above
What costs are allocated to the good units transferred out during September?
(Round the cost per equivalent unit to the nearest penny.)
a. $294,430.00
b. $255,373.60
c. $353,467.00
d. $355,421.18
e. $359,410.60
f. $365,151.00
g. $348,452.14
h. None of the above

Cracked Inc. manufactures a single product and uses the FIFO method of process costing.
Direct materials are added at the beginning of the production process. Conversion costs
are incurred evenly throughout production. Inspection takes place at the end of the
production process. After inspection, some units are spoiled due to defects. Spoiled units
generally constitute 2% of the good units transferred out (this is normal spoilage).
Assume all spoilage is from the current month's production. Data provided for September
is as follows:
Units:
WIP, beginning inventory
WIP, ending inventory
Started in September
Good units completed and transferred out
12,500
5,700
54,000
58,500
Beginning work in process was 40% complete with respect to conversion. Ending work
in process was 20% complete with respect to conversion.
Costs:
WIP, beginning inventory:
$ 66,415
$ 37,622
Direct material cost
Conversion costs
Costs added:
$160,920
$119,574
Direct material costs added
Conversion costs added

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