Question

Abdallah Incorporated manufactures medium-size desks in its Processing Department. Direct materials are added at the initiation of the cycle. Conversion costs are incurred evenly throughout the production cycle. Before inspection, some products are spoiled due to non-detectible defects. Inspection occurs at the end of the process. Spoiled desks generally constitute 10% of the good units. Data for March 2019 are as follows:

WIP, beginning inventory 3/1/20X5 32,000 units
Direct materials (100% complete)
Conversion costs (85% complete)
Started during March 70,000 units
Completed and transferred out 80,000 units
WIP, ending inventory 3/31/20X5 18,000 units
Direct materials (100% complete)
Conversion costs (80% complete)
Costs:
WIP, beginning inventory:
Direct materials $ 70,000
Conversion costs 40,000
Direct materials added 105,000
Conversion costs added 128,160
1. What are the normal and abnormal spoilage units, respectively, for March when using FIFO?
A) 3,200 units; 800 units
B) 1,950 units; 1,390 units
C) 3,690 units; 1,850 units
D) 1,420 units; 2,000 units
2. What costs would be associated with normal and abnormal spoilage, respectively, using the FIFO method of process costing?
A) $5,890; $9,133
B) $1,440; $4,800
C) $4,800; $2,640
D) $10,560; $2,640

Answer 1

48000 units.

Step-by-step explanation:

Total units started during the month:$70000

As FIFO is the method used the WIP,ending inventory (3/31 /of20x5) of 18000 units and normal spoilage of 3200 units and abnormal spoilage of 800units have no units from WIP, opening inventory (3/1/20x5) and hence,the WIP,ending inventory (3/31/20x5) and spoilage(both normal and abnormal) from units started during march:

The total units started,completed and transferred during the march:

Started during the march-normal spoilage-abnormal spoilage-WIP ending inventory (3/1/20x5)

=70000units-3200units-800units-18000units

=48000 units.