Lumberton 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 20X7:

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 equivalent units of production in each department.

b. Determine the cost per equivalent unit in each department and compute the cost transferred out,

the cost in ending inventory, and the cost of spoilage (if necessary).