Question
Ramsha Industries makes rocking chairs. The chairs are assembled in the Assembly Department and stained and...
Ramsha Industries makes rocking chairs. The chairs are assembled in the
Assembly Department and stained and sealed in the Finishing Department. Chairs are
tested for quality in the Assembly Department before being transferred to Finishing.
Normal spoilage (defective chairs) averages 1% of good units in the Assembly Department.
Ramsha uses the FIFO cost method of process costing.
Activity during February in the Assembly Department:
Production activity:
Material
Conversion
Work in process, beginning inventory
1,000
90%
50%
Started in February
6,000
Good units transferred out
6,000
Work in process, ending inventory
900
95%
75%
Cost activity:
Total
Material
Conversion
Costs in beginning WIP
83,830
$
65,080
$
18,750
$
February costs
525,570
387,520
138,050
What is the total cost of the units transferred out?
What is the cost of ending inventory?
How much should be charged to Loss from Abnormal Spoilage?
What is the unit cost of the goods transferred out in February?
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