A22 Problem: Process Costing – Fortis Manufacturing Limited

A22 Problem: Process Costing – Fortis Manufacturing Limited

 Fortis Manufacturing Ltd uses FIFO based process costing. Direct materials are added at the beginning of the production process and conversion costs are added evenly during production.Inspection occurs when production is 100% complete. Normal spoilage is 8% of good unitscompleted and transferred out to finished goods during the period. There was both normal andabnormal spoilage during the period. Data for March is:

Units DirectMaterialConversionCostsWIP, beginning (25% complete) 4,000$ 76,000$11,000Started 60,000Good units completed & transferred out 52,000WIP, ending (80% complete) 6,500Current period costs $1,080,000$617,000Costs per equivalent unit for work done in March$18$10

Required:Calculate the cost of:(a) Ending inventory(b) Goods transferred to finished goods inventory(c) Normal spoilage(d) Abnormal spoilage