ANSWER LETTER D and E ONLY (Defective units and rework) Plastico produces plastic pipe to customer specifications. Losses of less than 5 per cent are considered normal because they areinherent in the production process. The company applies overhead to products using machine hours. PlastiCo used the following information in setting itspredetermined OH rate for 2010:Expected overhead other than rework$850,000Expected rework costs75,000Total expected overhead$925,000Expected machine hours for 2010100,000During 2010, the following production and cost data were accumulated:2,000,000 feet of pipe40,000 feet of pipeTotal good production completedTotal defectsEnding inventory75,000 feet of pipeTotal cost of direct material for Job #B316$687,100Total cost of direct labor for Job #B316$157,750Total machine hours for Job #B3163,080Cost of reworking defects during 2010$75,500Total actual overhead cost for 2010$862,000a.Determine the overhead application rate for 2010.b.Determine the cost for Job #B316 in 2010.C.Assume that the rework is normal and those units can be sold for the regular selling price. How will PlastiCo account for the $75,500 of rework cost?d.Assume that PlastiCo does not include rework costs in developing the overhead application rate because rework is related to specific jobs. Determine thecost of Job #B316.е.Using the information from (d), assume that 20 per cent of the rework cost was specifically related to 200 feet of pipe produced for Job #B316. The reworkedpipe can be sold for $3.50 per foot. What is the total cost of Job #B316?

Name: ANSWER LETTER D and E ONLY (Defective units and rework) Plastico produ
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Description: ANSWER LETTER D and E ONLY (Defective units and rework) Plastico produces plastic pipe to customer specifications. Losses of less than 5 per cent are considered normal because they areinherent in the production process. The company applies overhead t

Overhead application (OA) refers to the assignment of the cost of factory overhead to the produced…

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Accounting

in the production process. The company applies ove to products using machir predetermined OH rate for 2010: Expected overhead other than rework S850,000 Expected rework costs 75,000 $925,000 100,000 Total expected overhead Expected machine hours for 2010 During 2010, the following production and cost data were accumulated: Total good production completed Total defects 2,000,000 feet of pipe 40,000 feet of pipe Ending inventory 75,000 feet of pipe Total cost of direct material for Job #8316 $687,100 Total cost of direct labor for Job #8316 $157,750 Total machine hours for Job #8316 3,080 Cost of reworking defects during 2010 S75 500

in the production process. The company applies ove to products using machir predetermined OH rate for 2010: Expected overhead other than rework S850,000 Expected rework costs 75,000 $925,000 100,000 Total expected overhead Expected machine hours for 2010 During 2010, the following production and cost data were accumulated: Total good production completed Total defects 2,000,000 feet of pipe 40,000 feet of pipe Ending inventory 75,000 feet of pipe Total cost of direct material for Job #8316 $687,100 Total cost of direct labor for Job #8316 $157,750 Total machine hours for Job #8316 3,080 Cost of reworking defects during 2010 S75 500

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter2: Accounting For Materials

Section: Chapter Questions

Problem 21E: Defective work Herbert Electronics manufactures an integrated transistor circuit board for repeat...

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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.
Walloon Company produced 150 defective units last month at a unit manufacturing cost of 30. The defective units were discovered before leaving the plant. Walloon can sell them as is for 20 or can rework them at a cost of 15 and sell them at the regular price of 50. What is the total relevant cost of reworking the defective units? a. 2,250 b. 3,000 c. 4,500 d. 6,750
Lloyd Industries manufactures electrical equipment from specifications received from customers. Job X10 was for 1,000 motors to be used in a specially designed electrical complex. The followingcosts were determined for each motor: At final inspection, Lloyd discovered that 33 motors did not meet the exacting specifications established by the customer. Anexamination indicated that 18 motors were beyond repair andshould be sold as spoiled goods for 75 each. The remaining15 motors, though defective, could be reconditioned as first-qualityunits by the addition of 1,650 for materials, 1,500 for labor, and1,200 for factory overhead. Required: Prepare the journal entries to record the following: 1. The scrapping of the 18 motors, with the income from spoiledgoods treated as a reduction in the manufacturing cost of thespecific job. 2. The correction of the 15 defective motors, with the additionalcost charged to the specific job. 3. The additional cost of replacing the 18 spoiled motors with newmotors. 4. The sale of the spoiled motors for 75 each. 5. If the reconditioned motors sell for 400 each, is Lloyd betteroff reconditioning the defective motors or selling them as isfor 75 as spoiled goods?
Defective work Herbert Electronics manufactures an integrated transistor circuit board for repeat customers but also accepts special orders for the same product. Job No. JM4 incurred the following unit costs for 1,000 circuit boards manufactured: When the completed products were tested, 50 circuit boards were found to be defective. The costs per unit of correcting the defects follow: Record the journal entry for the costs to correct the defective work: a. If the cost of the defective work is charged to factory overhead. b. If the cost of the defective work is charged to the specific job.
Pinter Company had the following environmental activities and product information: 1. Environmental activity costs 2. Driver data 3. Other production data Required: 1. Calculate the activity rates that will be used to assign environmental costs to products. 2. Determine the unit environmental and unit costs of each product using ABC. 3. What if the design costs increased to 360,000 and the cost of toxic waste decreased to 750,000? Assume that Solvent Y uses 6,000 out of 12,000 design hours. Also assume that waste is cut by 50 percent and that Solvent Y is responsible for 14,250 of 15,000 pounds of toxic waste. What is the new environmental cost for Solvent Y?
During the week of June 12, Harrison Manufacturing produced and shipped 15,000 units of its aluminum wheels: 3,000 units of Model A and 12,000 units of Model B. The following costs were incurred: Required: 1. Assume initially that the value-stream costs and total units shipped apply only to one model (a single-product value stream). Calculate the unit cost, and comment on its accuracy. 2. Calculate the unit cost for Models A and B, and comment on its accuracy. Explain the rationale for using units shipped instead of units produced in the calculation. 3. What if Model A is responsible for 40 percent of the materials cost? Show how the unit cost would be adjusted for this condition.
Pocono Cement Forms expects $900,000 in overhead during the next year. It does not know whether it should apply overhead on the basis of its anticipated direct labor hours of 60,000 or its expected machine hours of 30,000. Determine the product cost under each predetermined allocation rate if the last job incurred $1,550 in direct material cost, 90 direct labor hours, and 75 machine hours. Wages are paid at $16 per hour.
CleanCom Company specializes in cleaning commercial buildings and construction sites. Each building and site is different, requiring amounts and types of supplies and labor for each job. CleanCom estimated the following for the year: During the year, the following actual amounts were experienced: If CleanCom uses a normal costing system and overhead is applied on the basis of direct labor hours, what is the cost of cleaning a construction site that takes 140 of direct materials and 21 direct labor hours? a. 455 b. 508 c. 648 d. 644
Ingles Company manufactures external hard drives. At the beginning of the period, the following plans for production and costs were revealed: During the year, 24,800 units were produced and sold. The following actual costs were incurred: There were no beginning or ending inventories of direct materials. The direct materials price variance was 10,168 unfavorable. In producing the 24,800 units, a total of 12,772 hours were worked, 3 percent more hours than the standard allowed for the actual output. Overhead costs are applied to production using direct labor hours. Required: 1. Prepare a performance report comparing expected costs to actual costs. 2. Determine the following: a. Direct materials usage variance b. Direct labor rate variance c. Direct labor usage variance d. Fixed overhead spending and volume variances e. Variable overhead spending and efficiency variances 3. Use T-accounts to show the flow of costs through the system. In showing the flow, you do not need to show detailed overhead variances. Show only the over- and underapplied variances for fixed and variable 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.)
One of the tennis rackets that Ace Sporting Goods manufactures is a titanium model (Slam) that sells for 149. The cost of each Slam consists of: Job 100 produced 100 Slams, of which six were spoiled and classified as seconds. Seconds are sold to discount stores for 50 each. Required: 1. Under the assumption that the loss from spoilage will be distributed to all jobs produced during the current period, use general journal entries to (a) record the costs of production, (b) put spoiled goods into inventory, and (c) record the cash sale of spoiled units. 2. Under the assumption that the loss due to spoilage will be charged to Job 100, use general journal entries to (a) record the costs of production, (b) put spoiled goods into inventory, and (c) record the cash sale of spoiled units.
Rulers Company is a neon sign company that estimated overhead will be $60,000, consisting of 1,500 machine hours. The cost to make Job 416 is $95 in neon, 15 hours of labor at $13 per hour, and five machine hours. During the month, it incurs $95 in indirect material cost, $130 in administrative labor, $320 in utilities, and $350 in depreciation expense. What is the predetermined overhead rate if machine hours are considered the cost driver? What is the cost of Job 416? What is the overhead incurred during the month?