The Cabin Cruise Company (CCC) is currently making batches of ship cabins for a cruise ship. Each batch contains 14 cabins. Ship cabins are prefabricated at the manufacturing plant and are installed onto ships once they are fully completed like gigantic Lego blocks. Cabins are sold as soon as they are complete.

Half of the raw materials (framing, plumbing, electrical, HVAC, doors, windows) are added to each batch at the very beginning of the process, and the other half (furniture, carpeting, artwork for the cabin walls) are added the very end of the process.

Conversion costs (Direct Labour and Variable Overhead) are added evenly during the process. When the batch is 40% complete for conversion, the cabins are inspected to make sure that they will fit into the cruise ship. Units that fail inspection are not worth repairing and are scrapped.In order to reduce manufacturing costs, CCC buys very low costs raw materials. In turn, this means that each batch usually results in one spoiled unit.

At the beginning of year month, there was one batch that was 20% complete for conversion (with a value of $142,000 worth of materials and $130,000 in conversion costs), and at the end of the year there was one batch that was 10% complete for conversion. During the year, there were 140 cabins started and 14 cabins scrapped. During the year $1,402,000 in material costs and $1,500,500 in conversion costs were added. CCC uses modified FIFO.

Required: What is the value of the ending WIP, Cost of Goods Sold and Spoilage Expense.

Answer rating: 100% (QA)

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