Principles of Cost Accounting
17th Edition
ISBN: 9781305087408
Author: Edward J. Vanderbeck, Maria R. Mitchell
Publisher: Cengage Learning
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Textbook Question
Chapter 2, Problem 21E
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
- 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.
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Journal entries to correct defective work. Columbus Fabricators manufacture golf carts and other recreational equipment. One order from Wisconsin Wholesale Company for 1000 carts showed the following costs per unit: direct materials, $40, direct labor, $20, and factory overhead applied at 140% of direct labor cost if defective work is charged to a specific job and 150% if it is not.
Final inspection revealed that wheels were assembled with improper bearings. The wheels were disassembled and the proper bearings inserted. The cost of correcting each defective cart consists of $2 added cost for bearings, $4 for labor, and factory overhead at the predetermined rate.
Required: Prepare journal entries to record correction of the defective units and transfer of the work in process to finished goods if:
(1) The Wisconsin Wholesale Company order is to be charged with the cost of defective units.
(2) The cost of correcting the defective work is not charged to Wisconsin Wholesale Company order.
GYM Machine Shop manufactures jacks equipment. One order comes from Muscle, Inc. for 2,000 jacks, which showed the following costs per unit:
Materials
$40.00
Labor
$17.50
FOH is 160% of direct labor cost (with 10% allowance for reworking defective units)
Final inspection revealed that 150 of the jacks were not properly produced. Correction of each unit requires 2.00 for materials, 3.00 for labor and factory overhead at an appropriate rate.
1. If defect is the result of internal failure, what is the cost of each unit of jacks produced?
a. $78.27b. $85.50c. $80.39d. $84.46
2. If defect is the result of change in specifications imposed by the customers, what is the cost of each unit of jacks produced?
a. $78.27b. $85.50c. $80.39d. $84.46
Pharoah Corp. received an order for 25 automatic mixing machines. Because of the order's exacting specifications, it is anticipated that defective and spoiled work will exceed the normal rate. The materials cost per unit is P80; labor cost, P194; and manufacturing overhead for this order is to be applied at 100% of the labor cost. During production, 5 units were found to be defective and required the following total additional costs: materials, P97, labor, P125, and manufacturing overhead at the 100% rate. On final inspection, 2 units were classified as seconds and sold for P400 each, the proceeds being credited to the order. The purchaser has agreed to accept the 23 machines, although the acceptable units are fewer than the number ordered. What is the unit cost of the completed units?
Chapter 2 Solutions
Principles of Cost Accounting
Ch. 2 - What are the two major objectives of materials...Ch. 2 - Prob. 2QCh. 2 - What factors should management consider when...Ch. 2 - Prob. 4QCh. 2 - What kind of information and data are needed to...Ch. 2 - How would you define the term economic order...Ch. 2 - What kind of information and data are needed to...Ch. 2 - What factors should be considered when determining...Ch. 2 - Prob. 9QCh. 2 - Prob. 10Q
Ch. 2 - Prob. 11QCh. 2 - Proper authorization is required before orders for...Ch. 2 - Prob. 13QCh. 2 - Prob. 14QCh. 2 - Prob. 15QCh. 2 - Prob. 16QCh. 2 - Prob. 17QCh. 2 - Normally, a manufacturer maintains an accounting...Ch. 2 - Prob. 19QCh. 2 - Why do companies adopt the LIFO method of...Ch. 2 - Prob. 21QCh. 2 - Prob. 22QCh. 2 - Prob. 23QCh. 2 - Prob. 24QCh. 2 - Prob. 25QCh. 2 - Prob. 26QCh. 2 - Prob. 27QCh. 2 - Prob. 28QCh. 2 - A manufacturing process may produce a considerable...Ch. 2 - After a product is inspected, some units may be...Ch. 2 - Order Point Pershing, Inc. expects daily usage of...Ch. 2 - Economic order quantity; order cost; carrying cost...Ch. 2 - Economic order quantity; order cost; carrying cost...Ch. 2 - Journalizing materials requisitions Penrose...Ch. 2 - Recording materials transactions Prepare a journal...Ch. 2 - PurrChems raw materials records contained the...Ch. 2 - Using first-in, first-out perpetual inventory...Ch. 2 - LIFO costing Using last-in, first-out perpetual...Ch. 2 - Using the weighted average method of perpetual...Ch. 2 - Prob. 10ECh. 2 - Renfro, Inc. was franchised on January 1, 2016. At...Ch. 2 - Recording materials transactions Craig Products...Ch. 2 - Recording materials transactions Broadwell...Ch. 2 - JIT and cost control Matsui Industries produces...Ch. 2 - Kenkel, Ltd. uses backflush costing to account for...Ch. 2 - For E2-15, prepare any journal entries that would...Ch. 2 - Davis Co. uses backflush costing to account for...Ch. 2 - For E2-17, prepare any journal entries that would...Ch. 2 - A machine shop manufactures a stainless steel part...Ch. 2 - Spoiled work Roger Company manufactures tennis...Ch. 2 - Defective work Herbert Electronics manufactures an...Ch. 2 - Perry Co. predicts it will use 25,000 units of...Ch. 2 - Prob. 2PCh. 2 - Economic order quantity; tabular computation Lopez...Ch. 2 - In P2-3, assume that the company desires a safety...Ch. 2 - Inventory costing methods The purchases and issues...Ch. 2 - Inventory costing methods The following...Ch. 2 - Terrills Transmissions uses a job order cost...Ch. 2 - Prob. 8PCh. 2 - Tuscany Products, Inc. uses a job order cost...Ch. 2 - Prob. 10PCh. 2 - JIT and cost control Langray, Ltd. produces 50,000...Ch. 2 - Backflush costing Russell Corp. uses backflush...Ch. 2 - Webster Company uses backflush costing to account...Ch. 2 - An examination of Buckhorn Fabricators records...Ch. 2 - One of the tennis rackets that Ace Sporting Goods...Ch. 2 - Lloyd Industries manufactures electrical equipment...Ch. 2 - Review Problem for Chapters 1 and 2 UltraLift...Ch. 2 - Financial and Nonfinancial Aspects of Changing to...Ch. 2 - Prob. 2MC
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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