Randall Inc. manufactures pocket protectors 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 1% of the good units transferred out (this is normal spoilage). Assume all spoilage is from the current month's production. Data provided for February is as follows: Units: WIP, beginning inventory (70% complete) 84,300 WIP, ending inventory (40% complete) 75,400 Started in February 354,500 Good units completed and transferred out 357,000 Costs: WIP, beginning inventory: Direct material cost $ 36,950 Conversion costs $ 15,730 Costs added: Direct material costs added $141,800 Conversion costs added $100,365 How many units will be included in abnormal spoilage for February? What cost would be associated with normal and abnormal spoilage, respectively, in February? What costs are allocated to the good units transferred out during February?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Randall Inc. manufactures pocket protectors 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 1% of the good units transferred out (this is normal
spoilage). Assume all spoilage is from the current month's production. Data provided for February is as follows:
Units: WIP, beginning inventory (70% complete) 84,300 WIP, ending inventory (40% complete) 75,400 Started
in February 354,500 Good units completed and transferred out 357,000 Costs: WIP, beginning inventory:
Direct material cost $ 36,950 Conversion costs $ 15,730 Costs added: Direct material costs added $141,800
Conversion costs added $100,365 How many units will be included in abnormal spoilage for February? What
cost would be associated with normal and abnormal spoilage, respectively, in February? What costs are
allocated to the good units transferred out during February?
Transcribed Image Text:Randall Inc. manufactures pocket protectors 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 1% of the good units transferred out (this is normal spoilage). Assume all spoilage is from the current month's production. Data provided for February is as follows: Units: WIP, beginning inventory (70% complete) 84,300 WIP, ending inventory (40% complete) 75,400 Started in February 354,500 Good units completed and transferred out 357,000 Costs: WIP, beginning inventory: Direct material cost $ 36,950 Conversion costs $ 15,730 Costs added: Direct material costs added $141,800 Conversion costs added $100,365 How many units will be included in abnormal spoilage for February? What cost would be associated with normal and abnormal spoilage, respectively, in February? What costs are allocated to the good units transferred out during February?
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