Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
16th Edition
ISBN: 9780134475585
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 18, Problem 18.27E
Spoilage,
| Production (units) | 10,000 |
| Good parts produced | 9,750 |
| Direct material cost/unit | $ 5.00 |
The spoiled parts were identified after 100% of the direct material cost was incurred. The disposal value is $2/part.
- 1. Record the journal entries if the spoilage was (a) job specific or (b) common to all jobs.
Required
- 2. Comment on the differences arising from the different treatment for these two scenarios.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
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.
Spoilage, journal entries. Plastique produces parts for use in various industries. Plastique uses a job-costing system. The nature of its process is such that management expects normal spoilage at a rate of 2% of good parts. Data for last month is as follows:
Luzadis Company makes furniture using the latest automated technology. The company uses a job-order costing system and applies manufacturing overhead cost to products on the basis of machine-hours. The predetermined overhead rate was based on a cost formula that estimates $1,368,000 of total manufacturing overhead for an estimated activity level of 72,000 machine-hours.
During the year, a large quantity of furniture on the market resulted in cutting back production and a buildup of furniture in the company’s warehouse. The company’s cost records revealed the following actual cost and operating data for the year:
Machine-hours
61,000
Manufacturing overhead cost
$ 1,324,000
Inventories at year-end:
Raw materials
$ 16,000
Work in process (includes overhead applied of $115,900)
$ 188,000
Finished goods (includes overhead applied of $208,620)
$ 338,400
Cost of goods sold (includes overhead applied of $834,480)
$ 1,353,600
Required:
1. Compute the underapplied or…
Chapter 18 Solutions
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
Ch. 18 - Why is there an unmistakable trend in...Ch. 18 - Distinguish among spoilage, rework, and scrap.Ch. 18 - Normal spoilage is planned spoilage. Discuss.Ch. 18 - Costs of abnormal spoilage are losses. Explain.Ch. 18 - What has been regarded as normal spoilage in the...Ch. 18 - Units of abnormal spoilage are inferred rather...Ch. 18 - In accounting for spoiled units, we are dealing...Ch. 18 - Total input includes abnormal as well as normal...Ch. 18 - Prob. 18.9QCh. 18 - The unit cost of normal spoilage is the same as...
Ch. 18 - In job costing, the costs of normal spoilage that...Ch. 18 - The costs of rework are always charged to the...Ch. 18 - Abnormal rework costs should be charged to a loss...Ch. 18 - When is a company justified in inventorying scrap?Ch. 18 - How do managers use information about scrap?Ch. 18 - Prob. 18.16MCQCh. 18 - Which of the following is a TRUE statement...Ch. 18 - Healthy Dinners Co. produces frozen dinners for...Ch. 18 - Fresh Products, Inc. incurred the following costs...Ch. 18 - Normal and abnormal spoilage in units. The...Ch. 18 - Weighted-average method, spoilage, equivalent...Ch. 18 - Weighted-average method, assigning costs...Ch. 18 - FIFO method, spoilage, equivalent units. Refer to...Ch. 18 - FIFO method, assigning costs (continuation of...Ch. 18 - Weighted-average method, spoilage. LaCroix Company...Ch. 18 - FIFO method, spoilage. 1. Do Exercise 18-25 using...Ch. 18 - Spoilage, journal entries. Plastique produces...Ch. 18 - Recognition of loss from spoilage. Spheres Toys...Ch. 18 - Weighted-average method, spoilage. LogicCo is a...Ch. 18 - FIFO method, spoilage. Refer to the information in...Ch. 18 - Standard-costing method, spoilage. Refer to the...Ch. 18 - Spoilage and job costing. (L. Bamber) Barrett...Ch. 18 - Reworked units, costs of rework. Heyer Appliances...Ch. 18 - Scrap, job costing. The Russell Company has an...Ch. 18 - Weighted-average method, spoilage. World Class...Ch. 18 - FIFO method, spoilage. Refer to the information in...Ch. 18 - Weighted-average method, shipping department...Ch. 18 - FIFO method, shipping department (continuation of...Ch. 18 - Physical units, inspection at various levels of...Ch. 18 - Spoilage in job costing. Jellyfish Machine Shop is...Ch. 18 - Rework in job costing, journal entry (continuation...Ch. 18 - Scrap at time of sale or at time of production,...Ch. 18 - Physical units, inspection at various stages of...Ch. 18 - Weighted-average method, inspection at 80%...Ch. 18 - Job costing, classifying spoilage, ethics....
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Luzadis Company makes furniture using the latest automated technology. The company uses a job-order costing system and applies manufacturing overhead cost to products on the basis of machine-hours. The predetermined overhead rate was based on a cost formula that estimates $1,368,000 of total manufacturing overhead for an estimated activity level of 72,000 machine-hours. During the year, a large quantity of furniture on the market resulted in cutting back production and a buildup of furniture in the company’s warehouse. The company’s cost records revealed the following actual cost and operating data for the year: Machine-hours 61,000 Manufacturing overhead cost $ 1,324,000 Inventories at year-end: Raw materials $ 16,000 Work in process (includes overhead applied of $115,900) $ 188,000 Finished goods (includes overhead applied of $208,620) $ 338,400 Cost of goods sold (includes overhead applied of $834,480) $ 1,353,600 Required: 1. Compute the underapplied or…arrow_forwardLuzadis Company makes furniture using the latest automated technology. The company uses a job-order costing system and applies manufacturing overhead cost to products on the basis of machine-hours. The predetermined overhead rate was based on a cost formula that estimates $1,068,000 of total manufacturing overhead for an estimated activity level of 89,000 machine-hours. During the year, a large quantity of furniture on the market resulted in cutting back production and a buildup of furniture in the company's warehouse. The company's cost records revealed the following actual cost and operating data for the year: Machine-hours Manufacturing overhead cost Inventories at year-end: Raw materials Work in process (includes overhead applied of $44,400) Finished goods (includes overhead applied of $150,960) Cost of goods sold (includes overhead applied of $692,640) Required: 1. Compute the predetermined overhead rate used by the company during the year. 2. Is Manufacturing Overhead…arrow_forwardA process costing system in your company. Direct material A is placed into production at the beginning of the process, while direct material B is placed into production at the end of the process. Inspection occurs at the end of the process, before the addition of direct material B. Normal spoilage is 5% of good units. For March the company had the following activities: Beginning work-in-process inventory 4,000 units, 30% complete Units placed in production 28,000 unit Good units completed 24,000 units Ending work-in-process inventory 6,000 units, 60% complete Cost of beginning work-in-process $10,000 ($5,500 direct material A, $4,500 conversion) Direct material A costs, current $38,000 Direct material B costs, current $26,400 Conversion costs, current $42,500 Required: Prepare a production cost worksheet assuming that spoilage is recognized and the weighted-average method is used.arrow_forward
- Luzadis Company makes furniture using the latest automated technology. The company uses a job-order costing system and applies manufacturing overhead cost to products on the basis of machine-hours. The predetermined overhead rate was based on a cost formula that estimates $1,207,000 of total manufacturing overhead for an estimated activity level of 71,000 machine-hours. During the year, a large quantity of furniture on the market resulted in cutting back production and a buildup of furniture in the company's warehouse. The company's cost records revealed the following actual cost and operating data for the year. Machine-hours Manufacturing overhead cost Inventories at year-end: Raw materials Work in process (includes overhead applied of $46,750) Finished goods (includes overhead applied of $187,000) Cost of goods sold (includes overhead applied of $701,250) Required: 1. Compute the underapplied or overapplied overhead. 2. Assume that the company closes any underapplied or overapplied…arrow_forwardhow can i get this problem resolve? Landen Corporation uses a job-order costing system. At the beginning of the year, the company made the following estimates: Direct labor-hours required to support estimated production 125,000 Machine-hours required to support estimated production 62,500 Fixed manufacturing overhead cost $ 350,000 Variable manufacturing overhead cost per direct labor-hour $ 3.80 Variable manufacturing overhead cost per machine-hour $ 7.60 During the year, Job 550 was started and completed. The following information is available with respect to this job: Direct materials $ 201 Direct labor cost $ 240 Direct labor-hours 15 Machine-hours 5 Required: 1. Assume that Landen has historically used a plantwide predetermined overhead rate with direct labor-hours as the allocation base. Under this approach: a. Compute the plantwide predetermined overhead rate. b. Compute the total manufacturing cost of Job 550. c.…arrow_forwardBlue 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?arrow_forward
- how can i get this problem resolved? Landen Corporation uses a job-order costing system. At the beginning of the year, the company made the following estimates: Direct labor-hours required to support estimated production 125,000 Machine-hours required to support estimated production 62,500 Fixed manufacturing overhead cost $ 350,000 Variable manufacturing overhead cost per direct labor-hour $ 3.80 Variable manufacturing overhead cost per machine-hour $ 7.60 During the year, Job 550 was started and completed. The following information is available with respect to this job: Direct materials $ 201 Direct labor cost $ 240 Direct labor-hours 15 Machine-hours 5 Required: 1. Assume that Landen has historically used a plantwide predetermined overhead rate with direct labor-hours as the allocation base. Under this approach: a. Compute the plantwide predetermined overhead rate. b. Compute the total manufacturing cost of Job 550.…arrow_forwardSavallas Company is highly automated and uses computers to control manufacturing operations. The company uses a job-order costing system and applies manufacturing overhead cost to products on the basis of computer-hours. The following estimates were used in preparing the predetermined overhead rate at the beginning of the year: Computer-hours 82,000 Fixed manufacturing overhead cost $ 1,275,000 Variable manufacturing overhead per computer-hour $ 3.10 During the year, a severe economic recession resulted in cutting back production and a buildup of inventory in the company’s warehouse. The company’s cost records revealed the following actual cost and operating data for the year: Computer-hours 50,000 Manufacturing overhead cost $ 1,016,000 Inventories at year-end: Raw materials $ 440,000 Work in process $ 180,000 Finished goods $ 1,030,000 Cost of goods sold $ 2,780,000 Required: 1. Compute the…arrow_forwardXYZ Company manufactures picture frames of all sizes and shapes and uses job order costing system. There is always some spoilage in each production run. The following costs relate to the current production run. • Estimated overhead (exclusive of allowance for spoilage) • Spoilage allowance (estimated) P250,000 P 37,500 120,000 • Direct Labor hours A single unit of frame requires direct material and direct labor in the amount of P5.00 and P6.00 respectively, and 1.5 direct labor hours. 31. Assuming spoilage is attributable to all jobs, what is the unit cost of each frame? a. 14.60 b. 13.40 c. 14.75 d. 13.50 32. Assuming spoilage is attributable to the specific job, what is the unit cost of each frame? a. 14.14 b. 14.60 c. 13.12 d. 14.12arrow_forward
- In its Department R, Recyclers, Inc., processes donated scrap cloth into towels for sale in local thrift shops. It sells the products at cost. The direct materials costs are zero, but the operation requires the use of direct labor and overhead. The company uses a process costing system and tracks the processing volume and costs incurred in each period. At the start of the current period, 550 towels were in process and were 60 percent complete. The costs incurred were $1,207. During the month, costs of $20,500 were incurred, 4,100 towels were started, and 275 towels were still in process at the end of the month. At the end of the month, the towels were 20 percent complete. Required: a. Prepare a production cost report; the company uses weighted-average process costing. b. Show the flow of costs through T-accounts. Assume that current period conversion costs are credited to various payables. i did A part , i want help in Barrow_forwardIn its Department R, Recyclers, Inc., processes donated scrap cloth into towels for sale in local thrift shops. It sells the products at cost. The direct materials costs are zero, but the operation requires the use of direct labor and overhead. The company uses a process costing system and tracks the processing volume and costs incurred in each period. At the start of the current period, 550 towels were in process and were 60 percent complete. The costs incurred were $1,207. During the month, costs of $20,500 were incurred, 4,100 towels were started, and 275 towels were still in process at the end of the month. At the end of the month, the towels were 20 percent complete. Required: a. Prepare a production cost report; the company uses weighted-average process costing. b. Show the flow of costs through T-accounts. Assume that current period conversion costs are credited to various payables. i did A i want help in barrow_forwardIn its Department R, Recyclers, Inc., processes donated scrap cloth into towels for sale in local thrift shops. It sells the products at cost. The direct materials costs are zero, but the operation requires the use of direct labor and overhead. The company uses a process costing system and tracks the processing volume and costs incurred in each period. At the start of the current period, 550 towels were in process and were 60 percent complete. The costs incurred were $1,207. During the month, costs of $20,500 were incurred, 4,100 towels were started, and 275 towels were still in process at the end of the month. At the end of the month, the towels were 20 percent complete. Required: a. Prepare a production cost report; the company uses weighted-average process costing. b. Show the flow of costs through T-accounts. Assume that current period conversion costs are credited to various payables.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Cost AccountingAccountingISBN:9781305087408Author:Edward J. Vanderbeck, Maria R. MitchellPublisher:Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
Principles of Cost Accounting
Accounting
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
Job Costing and Spoilage | Topic 2 | Spoilage, Re-work, and Scrap; Author: Samantha Taylor;https://www.youtube.com/watch?v=VP55_W2oXic;License: CC-BY