Use the information below to answer the following question(s).Craft Concept manufactures small tables in its Processing Department.Direct materials are added at the initiation of the production cycle and must be bundled in single kits for each unit.Conversion costs are incurred evenly throughout the production cycle.Before inspection, some units are spoiled due to non-detectable materials defects.Inspection occurs at the end of the process.Spoiled units generally constitute 5 percent of the good units.Data for December are as follows:

-Under the FIFO method, all spoilage costs are assumed to be

Question

Use the information below to answer the following question(s).Craft Concept manufactures small tables in its Processing Department.Direct materials are added at the initiation of the production cycle and must be bundled in single kits for each unit.Conversion costs are incurred evenly throughout the production cycle.Before inspection, some units are spoiled due to non-detectable materials defects.Inspection occurs at the end of the process.Spoiled units generally constitute 5 percent of the good units.Data for December are as follows:
 
-Under the FIFO method, all spoilage costs are assumed to be

Quizplus · Accepted Answer

Under the FIFO method, the cost of spoilage is assumed to be related to the units completed during the period. This is because under FIFO, the costs associated with the units in beginning inventory are assumed to have been completed first and therefore the spoilage costs are only related to the units completed during the current period.

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