Answer the following question(s)using the information below.Samantha's Office Supplies manufactures desk organizers in its Processing Department.Direct materials are added at the beginning of the process and conversion costs are incurred evenly throughout the production cycle.Inspection takes place at the end of the process and spoiled units generally constitute 4% of the good units.Data provided for February are as follows:

-What are the normal and abnormal spoilage units, respectively, for February when using FIFO?
A)1,400 units; 1,480 units
B)3,280 units; 1,640 units
C)3,240 units; 7,760 units
D)3,240 units; 11,000 units
E)7,760 units; 1,640 units

Question

Answer the following question(s)using the information below.Samantha's Office Supplies manufactures desk organizers in its Processing Department.Direct materials are added at the beginning of the process and conversion costs are incurred evenly throughout the production cycle.Inspection takes place at the end of the process and spoiled units generally constitute 4% of the good units.Data provided for February are as follows:
 
-What are the normal and abnormal spoilage units, respectively, for February when using FIFO?
A)1,400 units; 1,480 units 
B)3,280 units; 1,640 units 
C)3,240 units; 7,760 units 
D)3,240 units; 11,000 units 
E)7,760 units; 1,640 units

Quizplus · Accepted Answer

Using FIFO method, the 48,000 units that are in process on February 1st will be completed first, followed by the 60,000 units started on February 10th. 
Total units completed in February: 48,000 + 60,000 - 3,200 (ending WIP units) = 104,800 units. 
Normal spoilage is 4% of the good units, which is 4% of 100,000 units (total good units completed) = 4,000 units. 
Abnormal spoilage is the difference between the actual spoilage (3,240 units given in the question) and the expected normal spoilage (4,000 units calculated above) = 760 units. 
Therefore, the normal spoilage units are 4,000 and the abnormal spoilage units are 760. 
The answer is C) 3,240 units; 7,760 units.

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