Answer the Following Questions Using the Information Below

question 30

Multiple Choice

Answer the following questions using the information below:
Samantha's Office Supplies manufactures desk organizers in its Processing Department. Direct materials are included at the inception of the production cycle and must be bundled in single kits for each unit. Conversion costs are incurred evenly throughout the production cycle. Inspection takes place as units are placed into production. After inspection, some units are spoiled due to nondetectible material defects. Spoiled units generally constitute 4% of the good units. Data provided for February 2012 are as follows:
Costs:

-What costs would be associated with normal and abnormal spoilage, respectively, using the FIFO method of process costing?

• A)$25,142; $60,216
• B)$60,216; $25,142
• C)$2,514; $6,020
• D)$16,000; $8,000

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Definitions:

Profit Motive

The intent to achieve financial gain, which drives individuals and companies to engage in business activities.

Government Subsidies

Financial support provided by the government to firms, individuals, or other governmental bodies, often aimed at promoting economic and social policies.

Production Process

The sequence of operations or activities involved in converting inputs into finished goods or services.