Assume that 50,000 units are put into production for Job 101 and the total cost of production was P1,500,000. At the completion of production only 47,000 units were good. The remaining units were classified as spoiled and had a salvage value of P7,000. Management considers spoilage to be normal to the general production process and includes normal spoilage in the predetermined factory overhead application rate. When accounting for the spoilage of Job 101, what is the total amount of costs to be removed from work-in-process inventory?

Assume that 50,000 units are put into production for Job 101 and the total cost of production was P1,500,000. At the completion of production only 47,000 units were good. The remaining units were classified as spoiled and had a salvage value of P7,000. Management considers spoilage to be normal to the general production process and includes normal spoilage in the predetermined factory overhead application rate. When accounting for the spoilage of Job 101, what is the total amount of costs to be removed from work-in-process inventory?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter14: Quality And Environmental Cost Management

Section: Chapter Questions

Problem 27E: Using the Taguchi quality loss function, an average loss of 20 per unit is calculated. During the...

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Blue Co.'s Job 405 for the manufacture of 2,200 wagons was completed during August at the unit costs presented below. Direct materials $24 Direct labor 18 Factory overhead 14 $56 Final inspection of Job 405 disclosed 200 spoiled wagons that were sold to a jobber for $6,000. Assume that spoilage loss is attributable to the exacting specifications of Job 405 and is charged to this specific job. What would be the unit cost of the good wagons produced on Job 405?
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PVW Company manufactures products to customer specifications. A job costing system is used to accumulate production costs. During the month of September, an order (Job X2) by a customer comprised 5,000 units of the product; manufacturing cost is $5.00 per unit. The processing of this job, however, resulted in spoilage of 400 units, considered normal with no disposal value, attributable to this specific job. Required: How will you account for the above transaction, for example, in a journal entry? Determine the unit cost showing computations.
Nadia Company's Job No. 310 (for the manufacture of 6,600 coats) was completed on September 20 at the following unit costs: Direct materials - $1,500, Direct labor - 1,000, Factory overhead (including allowance of$P50 for spoiled work) - 500. Total = $3,000. Final inspection of Job No. 310 disclosed 600 spoiled costs. These were subsequently sold to a jobber for P600,000. Assuming that spoilage loss is chargeable to the particular job, the unit cost of the good coats produced per Job No. 310 must be:
Simar Company’s Job 888 manufactured 13,750 units that were completed in February at unit costs presented as follows: Direct materials P300 Direct labor 270 Factory overhead (includes an allowance of P15 Spoiled work) 270Final inspection of Job 888 disclosed 1,250 spoiled units, which were sold for P225,000.What would be the unit cost of good units if the spoilage loss is attributable to exacting specifications of Job 004?
Elmer Company’s Job #040335 for the manufacture of 6,600 coats was completed during Marchat the following unit costs:Direct materials P1,500Direct labor 1,000Manufacturing overhead (includes allowances of P50 for spoiled work) 5003,000Final inspection of job #040335 disclosed 600 spoiled coats, which were sold to a jobber forP600,000.29. What would be the unit cost of the good coats produced on job #040335 assuming thatspoilage loss is charged to all production? Attributable to exacting specifications of job#040335?a. 2,950 b. 3,000 c. 3,145 d. 3,20030. Using the information in item 29, what is the journal entry to record the disposal of thespoiled coats?a. Cash 600,000Manufacturing overhead 1,200,000Work in process -Job #040335 1,800,000b. Cash 600,000Work in process -Job #040335 600,000c. Cash 600,000Abnormal loss 1,200,000Work in process -Job #040335 1,800,000d. Cash 600,000Manufacturing overhead 1,170,000Work in process -Job #040335 1,170,000
Elmer Company’s Job #040335 for the manufacture of 6,600 coats was completed during Marchat the following unit costs:Direct materials P1,500Direct labor 1,000Manufacturing overhead (includes allowances of P50 for spoiled work) 5003,000Final inspection of job #040335 disclosed 600 spoiled coats, which were sold to a jobber forP600,000.29. What would be the unit cost of the good coats produced on job #040335 assuming thatspoilage loss is charged to all production? Attributable to exacting specifications of job#040335?a. 2,950 b. 3,000 c. 3,145 d. 3,200
If the 300 defective bolts(normal spoilage) were repaired and management wanted to be sure the incremental costs did not exceed the cost of producing new units, how would the rework costs be accounted for: a. Charged to overhead and spread over the costs of all products. b. Expensed as extraordinary. c. Charged to those belts repaired. d. As normal materials, labor and overhead.
A machine shop manufactures a stainless steel part that is used in an assembled product. Materials charged to a particular jobamounted to 600. At the point of final inspection, it was discoveredthat the material used was inferior to the specifications required bythe engineering department; therefore, all units had to be scrapped. Record the entries required for scrap under each of the following conditions: a. The revenue received for scrap is to be treated as a reductionin manufacturing cost but cannot be identified with a specificjob. The value of stainless steel scrap is stable and estimatedto be 125 for this job. The scrap is sold two months later forcash at the estimated value of 125. b. Revenue received for scrap is to be treated as a reduction inmanufacturing cost but cannot be identified with a specificjob. A firm price is not determinable for the scrap until it issold. It is sold eventually for 75 cash. c. The production job is a special job, and the 85 received onaccount for the scrap is to be treated as a reduction inmanufacturing cost. (A firm price is not determinable for thescrap until it is sold.) d. Only 40 cash was received for the scrap when it was sold inthe following fiscal period. (A firm price is not determinablefor the scrap until it is sold, and the amount to be received forthe scrap is to be treated as other income.)
Compute the total job cost for each of the following scenarios: a. If the direct labor cost method is used in applying factory overhead and the predetermined rate is 100%, what amount should be charged to Job 2010 for factory overhead? Assume that direct materials used totaled 5,000 and that the direct labor cost totaled 3,200. b. If the direct labor hour method is used in applying factory overhead and the predetermined rate is 10 an hour, what amount should be charged to Job 2010 for factory overhead? Assume that the direct materials used totaled 5,000, the direct labor cost totaled 3,200, and the number of direct labor hours totaled 250. c. If the machine hour method is used in applying factory overhead and the predetermined rate is 12.50 an hour, what amount should be charged to Job 2010 for factory overhead? Assume that the direct materials used totaled 5,000, the direct labor cost totaled 3,200, the direct labor hours were 250 hours, and the machine hours were 295 hours.
Verde Company reported operating costs of 50,000,000 as of December 31, 20x5, with the following environmental costs: Required: 1. Prepare an environmental cost report, classifying costs by quality category and expressing each as a percentage of total operating costs. What is the message of this report? 2. Prepare a pie chart that shows the relative distribution of environmental costs by category. What does this report tell you? 3. What if Verde deliberately did not include the cost of damaging the ecosystem because of solid waste disposal in its environmental cost report? Offer possible reasons for this decision. If consciously avoided, is this decision unethical?
Using the Taguchi quality loss function, an average loss of 20 per unit is calculated. During the year, 25,000 units were produced. Which of the following statements represents the correct application of the Taguchi loss function? a. The hidden costs of internal failure are 500,000. b. The hidden costs of external failure are 500,000. c. The costs of detection activities are 20 per unit inspected. d. The total external costs are 500,000.