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Home Q & A Board Other Fields Homework Help Business Economics
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pduvin pduvin
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6 years ago
What costs would be associated with normal and abnormal spoilage, respectively, using the FIFO method of process costing?
A) $5,890.64; $9,133.20
B) $5,890.64; $5,826.00
C) $6,469.64; $7,690.36
D) $7,690.36; $5,026.80
E) $9,133.20; $5,026.80
Textbook 
Cost Accounting: A Managerial Emphasis, Canadian Edition

Cost Accounting: A Managerial Emphasis, Canadian Edition


Edition: 7th
Authors:
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#1
6 years ago
E
Explanation:  E)    Direct Materials        Conversion Costs
WIP, Beginning inventory
Total cost to account for   $160,000   $120,000
Divide by equivalent units   80,000   78,150
Equivalent unit costs   $2.00   $1.54

(56,000 + 2,580 + 1,420 + 20,000) = 80,000 units
(3,150 + 56,000 + 2,580 + 1,420 + 15,000) = 78,150 units

Normal Spoilage = 2,580 units × $3.54 = $9,133.20
Abnormal Spoilage = 1,420 units × $3.54 = $5,026.80
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