Falcon Incorporated procures fish and then makes them into fillets and then prep

Question

Falcon Incorporated procures fish and then makes them into fillets and then prepares the fish fillets for distribution. Direct materials are added at the initiation of the cycle. Conversion costs are incurred evenly throughout the production cycle. Before inspection, some fillets are spoiled due to non-detectible defects. Inspection occurs when units are 50% converted. Spoiled fillets generally constitute 5% of the good fillets. Falcon utilizes the First-In, First-Out Method of Process Costing. The records from June 2018 indicate the following:

WIP, beginning inventory 6/1/2018                  75,000 fillets
Direct materials (100% complete)
Conversion costs (40% complete)
Started during June                                          153,950 fillets
Completed and transferred out 6/30/2018       115,000 fillets
WIP, ending inventory 6/30/2018                    32,000 fillets
Direct materials (100% complete)
Conversion costs (20% complete)

Costs for June:
WIP, beginning Inventory:
Direct materials                                          $ 150,000
Conversion costs                                              97,910
Direct materials added                                        305,000
Conversion costs added                                       393,130

a) What is the number of total spoiled units?
b) Normal spoilage units totals ________
c) Abnormal spoilage units totals ________
d) What is the total cost per equivalent unit using the first-in first-out method of process costing for Direct Materials?
e) What cost is allocated to abnormal spoilage using the first-in first-out process-costing method?
f) What is the amount of direct materials and conversion costs assigned to ending work in process using the first-in first-out process-costing method?

Explanation / Answer

FIFO method Beggining units 75000 Transferred out 1,15,000 Started intro production 153950 Normal spoilage 5750 (115000*5%) Abnormal spoilage 76,200 Ending units 32,000 228950 2,28,950 Equivalent units Material Conversion Beginning units 75000 75000 Completion in current period 0% 60% A 0 45000 Units started and completed 40,000 40,000 Completion 100% 100% B 40000 40000 Abnormal spoilage 76,200 76,200 Completion 100% 50% C 76200 38100 Ending Units 32,000 32,000 Completion 100% 20% D 32000 6400 Total units A+B+C 72000 91400 Per unit cost Cost Total units Per unit cost Material cost 305000 72000 4.24 Conversion cost 393130 91400 4.30 698130 8.54 Abnormal spoilage Completion 100% 50% Per unit cost 4.24 4.30 Units 76200 76200 Total cost    B 322792 163876 486668 Ending work in progress Completion 100% 20% Per unit cost 4.24 4.30 Units 32,000 32,000 Total cost     135556 27528 163083

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