A & Co manufactured 500 ceiling fans to fill an order by incurring: Direct material                                                  Rs. 150,000 Direct labor cost                                               Rs. 100,000 F.O.H (60% of labor cost)                                 Rs. 60,000_ Total production cost                                       Rs. 310,000   Some of the work was found defective, to make good such loss, following cost was incurred:   Rework cost on defective work Material                                                                Rs. 10,000 Labor                                                                     Rs. 30,000 F.O.H (60% of Labor cost)                                 Rs. 18,000   Required:            Pass accounting entries to record the cost incurred along with the adjusting entry for re-work cost, treating the loss as:                                 a) Normal                                 b) Abnormal

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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A & Co manufactured 500 ceiling fans to fill an order by incurring:

Direct material                                                  Rs. 150,000

Direct labor cost                                               Rs. 100,000

F.O.H (60% of labor cost)                                 Rs. 60,000_

Total production cost                                       Rs. 310,000

 

Some of the work was found defective, to make good such loss, following cost was incurred:

 

Rework cost on defective work

Material                                                                Rs. 10,000

Labor                                                                     Rs. 30,000

F.O.H (60% of Labor cost)                                 Rs. 18,000

 

Required:           

Pass accounting entries to record the cost incurred along with the adjusting entry for re-work cost, treating the loss as:

                                a) Normal

                                b) Abnormal

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