MyLab Accounting with Pearson eText -- Access Card -- for Horngren's Cost Accounting
16th Edition
ISBN: 9780134476384
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
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Textbook Question
Chapter 18, Problem 18.45P
The total costs for all 128,500 units of Job No. M102 follow. The job has been completed, but the costs are yet to be transferred to Finished Goods.
| Direct materials | $ 979,000 |
| Direct manufacturing labor | 840,000 |
| Manufacturing overhead | 1,650,500 |
| Total |
$3,469,500 |
- 1. Calculate the unit quantities of normal and abnormal spoilage.
Required
- 2. Prepare the
journal entries to account for Job No. M102, including spoilage, disposal of spoiled units, and transfer of costs to the Finished Goods account. - 3. Flextron’s controller, Vince Chadwick, tells Marta Suarez, the
management accountant responsible for Job No. M102, the following: “This was an unusual job. I think all 6,000 spoiled units should be considered normal.” Suarez knows that the work involved in Job No. M102 was not uncommon and that Flextron’s normal spoilage rate of 2% is the appropriate benchmark. She feels Chadwick made these comments because he wants to show a higher operating income for the year.- a. Prepare journal entries, similar to requirement 2, to account for Job No. M102 if all spoilage were considered normal. How will operating income be affected if all spoilage is considered normal?
- b. What should Suarez do in response to Chadwick’s comment?
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Sama Company is a contract manufacturer for a variety of pharmaceutical and over-the-counter products. It has a reputation for operational excellence and boasts a normal spoilage rate of 2% of normal input. Normal spoilage is recognized during the budgeting process and is classified as a component of manufacturing overhead when determining the overhead rate. Lynn Sanger, one of Flextron’s quality control managers, obtains the following information for Job No. M102, an order from a consumer products company. The order was completed recently, just before the close of Flextron’s fiscal year. The units will be delivered early in the next accounting period. A total of 128,500 units were started, and 6,000 spoiled units were rejected at final inspection, yielding 122,500 good units. Spoiled units were sold at $4 per unit. Sanger indicates that all spoilage was related to this specific job.
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Sama Company is a contract manufacturer for a variety of pharmaceutical and over-the-counter products. It has a reputation for operational excellence and boasts a normal spoilage rate of 2% of normal input. Normal spoilage is recognized during the budgeting process and is classified as a component of manufacturing overhead when determining the overhead rate. Lynn Sanger, one of Flextron’s quality control managers, obtains the following information for Job No. M102, an order from a consumer products company. The order was completed recently, just before the close of Flextron’s fiscal year. The units will be delivered early in the next accounting period. A total of 128,500 units were started, and 6,000 spoiled units were rejected at final inspection, yielding 122,500 good units. Spoiled units were sold at $4 per unit. Sanger indicates that all spoilage was related to this specific job.
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Chapter 18 Solutions
MyLab Accounting with Pearson eText -- Access Card -- for Horngren's Cost Accounting
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....
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