Scribd Logo
Upload

Welcome to Scribd!

  • 351 views

    Topic 5 - Spoilage, Defect, Scrap and Waste

    Uploaded by

    Krystyn Myrhyll
    XXX Company produced 8,500 units incurring direct material, direct labor, and factory overhead costs. 440 units were rejected and sold for salvage. Under the assumptions that spoiled goods costs are charged to a specific job or all production, the summary calculates: cost of spoiled goods, cost per finished unit, increase in unit cost and factory overhead, and journal entries. Additionally, 440 units were defective and reworked, incurring additional costs. Under the same assumptions, the summary calculates rework costs and their allocation.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content

    You might also like

    Topic 5 - Spoilage, Defect, Scrap and Waste

    Uploaded by

    Krystyn Myrhyll
    351 views1 page
    XXX Company produced 8,500 units incurring direct material, direct labor, and factory overhead costs. 440 units were rejected and sold for salvage. Under the assumptions that spoiled goods costs are charged to a specific job or all production, the summary calculates: cost of spoiled goods, cost per finished unit, increase in unit cost and factory overhead, and journal entries. Additionally, 440 units were defective and reworked, incurring additional costs. Under the same assumptions, the summary calculates rework costs and their allocation.

    Original Description:

    .............

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document
    XXX Company produced 8,500 units incurring direct material, direct labor, and factory overhead costs. 440 units were rejected and sold for salvage. Under the assumptions that spoiled goods costs are charged to a specific job or all production, the summary calculates: cost of spoiled goods, cost per finished unit, increase in unit cost and factory overhead, and journal entries. Additionally, 440 units were defective and reworked, incurring additional costs. Under the same assumptions, the summary calculates rework costs and their allocation.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as docx, pdf, or txt
    351 views1 page

    Topic 5 - Spoilage, Defect, Scrap and Waste

    Uploaded by

    Krystyn Myrhyll
    XXX Company produced 8,500 units incurring direct material, direct labor, and factory overhead costs. 440 units were rejected and sold for salvage. Under the assumptions that spoiled goods costs are charged to a specific job or all production, the summary calculates: cost of spoiled goods, cost per finished unit, increase in unit cost and factory overhead, and journal entries. Additionally, 440 units were defective and reworked, incurring additional costs. Under the same assumptions, the summary calculates rework costs and their allocation.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as docx, pdf, or txt
    of 1

    TOPIC 5 – Accounting for Materials (SPOILAGE, DEFECT, SCRAP, WASTE)

    Prepared by: Olivo, CPA, MBA

    XXX Company made 8,500 units with the following costs:


    Direct Materials P20.00
    Direct Labor P16.00
    Factory overhead P12.00

    The Factory overhead unit cost is inclusive of allowance of P1.50 for units that would not meet production standards but will be able
    to resell for at a salvage value.

    After completion, the 440 rejected units, a number within the normal range of spoilage, were sold for P21.00 each.

    Requirements:
    1. Assuming the loss on the spoilage is charged to a specific job:
    a. How much is the amount of the spoiled goods to be recognized?
    b. How much is the cost per unit of finished goods?
    c. How much is the increase from the original cost per unit to the cost per unit after spoilage?
    d. How much is the Loss on Spoiled Goods?
    e. How much is the increase in the FOHC as a result of the spoilage?
    2. Assuming the loss on the spoilage is charged to all production:
    a. How much is the amount of the spoiled goods to be recognized?
    b. How much is the cost per unit of finished goods?
    c. How much is the increase from the original cost per unit to the cost per unit after spoilage?
    d. How much is the Loss on Spoiled Goods?
    e. How much is the increase in the FOHC as a result of the spoilage?
    3. Provide Journal entry for assumptions 1 and 2

    XXX Company made 8,500 units with the following costs:


    Direct Materials P20.00
    Direct Labor P16.00
    Factory overhead P12.00

    The Factory overhead unit cost is inclusive of allowance of P1.50 for units that would not meet production standards and must be
    processed further in order to be salable.

    During production, the 440 units were found to be defective. The following costs were incurred in order to rework the defective
    units:
    Direct Materials P2,500
    Direct Labor P6,000
    Overhead P3,200

    Requirements:
    4. Assuming the additional cost is charged to a specific job:
    a. How much is the total amount of work in process to be forwarded to Finished Goods?
    b. How much is the cost per unit of finished goods?
    c. How much is the increase from the original cost per unit to the cost per unit after rework?
    d. How much cost of rework charged to Factory overhead control?
    5. Assuming the additional cost is charged to all production:
    a. How much is the total amount of work in process to be forwarded to Finished Goods?
    b. How much is the cost per unit of finished goods?
    c. How much is the increase from the original cost per unit to the cost per unit after rework?
    d. How much cost of rework charged to Factory overhead control?

    You might also like