Chandler Industries Has Two Departments

Chandler Industries has two departments. Department 1 uses FIFO costing and Department 2 uses weighted average.
Units are introduced into the process in Department 1 (this is the only material added in Department 1). Spoilage occurs continuously through the department and normal spoilage should not exceed 10 percent of the units started.
Department 2 adds material (packaging) at the 75 percent completion point; this material does not cause an increase in the number of units being processed. A quality control inspection takes place when the goods are 80 percent complete. Spoilage should not exceed 5 percent of the units transferred in from Department 1.
The following production cost data are applicable for operations for August of the current year:

Department 1 Production Data
Beginning inventory (65% complete)	1,000
Units started	25,000
Units completed	22,000
Units in ending inventory (40% complete)	2,800
Department 1 Cost Data
Beginning inventory:
Material	$ 1,550
Conversion	2,300	$ 3,850
Current period:
Material	$38,080
Conversion	78,645	116,725
Total costs to account for		$120,575
Department 2 Production Data
Beginning inventory (90% complete)	8,000
Units transferred in	22,000
Units completed	24,000
Units in ending inventory (20% complete)	4,500
Department 2 Cost Data
Beginning inventory:
Transferred in	$40,800
Material	24,000
Conversion	4,320	$ 69,120*
Current period:
Transferred in	$113,700
Material	53,775
Conversion	11,079	178,554
Total costs to account for		$247,674

*This may not be the same amount determined for Department 1;ignore any difference and use this figure.
Required:
a. Compute the equallent units of production in e ach department.
b. Determine the cost per equivalent urit in each department and compute the cost transferred out, the cost in ending inventory, and the cost of spoilage ( if necessary).

Correct Answer:

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