Spoilage with Two Departments-No Beginning Inventories The Dexter Production Company manufactures a single product. Its operations are a continuing process carried on in two departments-machining and finishing. In the production process, materials are added to the product in each department without increasing the number of units produced.

For the month of June, \(20 \times 1\), the company records indicated the following production statistics for each department:

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Machining Finishing Department Department Units in-process, June 1, 20X1 0 0 Units transferred from preceding department.. 0 60,000 Units started in production......... .80,000 0 Units completed and transferred out. .60,000 50,000 Units in-process, June 30, 20X1* 20,000 8,000 Units spoiled in production.. 0 2,000 *Percent of completion of units in process at June 30, 20X1: Materials Labor Overhead 100% 100% 50% 70% 25% 70% The units spoiled in production had no scrap value and were 50% complete as to mate- rial, labor, and overhead. The company's policy is to treat the cost of spoiled units in production as a separate clement of cost in the department in which the spoilage occurs.