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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 3% of the good units. Data provided for February 2015 are as follows:
-What costs would be associated with normal and abnormal spoilage,respectively,using the FIFO method of process costing?
Periodic Inventory System
An inventory system that records inventory purchases and sales periodically, updating the inventory balance at the end of an accounting period.
Average Cost
A method to determine the cost of goods sold and ending inventory by computing the weighted average of the costs of all goods available for sale.
Net Sales
The total revenue from sales minus returns, allowances, and discounts.
Gross Profit
The financial gain obtained after subtracting the cost of goods sold from net sales revenues, indicating the efficiency of core business operations.
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