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Albany Corporation produces a single product that is manufactured in two departments, Cutting and Finishing. Units of product are started in the Cutting Department and then transferred to the Finishing Department, where they are completed. Units are inspected for spoilage at the point where 50% of the materials have been placed into production and 30% of the conversion costs have been placed into production in the Finishing Department. If spoilage is detected at this time, the spoiled units are removed from production and scrapped. Good units are transferred to finished goods inventory, normal spoilage is charged to good units completed, and abnormal spoilage is charged as a period expense to the income statement. Normal spoilage is expected to be 5% of the total units that are in the manufacturing process in the Finishing Department during the month. At the end of June, 1,000 units were still in process in the Finishing Department, 80% complete as to materials and 60% complete as to conversion costs. During July, 5,000 units were transferred from the Cutting Department to the Finishing Department, and 4,700 were transferred from the Finishing Department to finished goods inventory. At the end of July, the Finishing Department still had 800 units in process, 40% complete as to materials, and 20% complete as to conversion costs. Cost data related to July operations for the Finishing Department is provided below. Manufacturing overhead is applied to production in the Finishing Department at the rate of 140% of direct labor cost. ALBANY CORPORATION DATA FOR FINISHING DEPARTMENT FOR MONTH OF JULY Beginning Inventory: Costs From Preceding Department Direct Materials Direct Labor 15,500 3,500 2,400 Current Period Costs Costs From Preceding Department Direct Materials Direct Labor 54,500 26,500 17,600

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