Problem 11

Little Mermaid Company received an order of 5,000 automatic mixing machines. The cost per unit is:
materials - P 5.00, labor - P 4.00, factory overhead applied at 150% of direct labor cost (140% in cases in
which any defective unit costs are to be charged to a specific order). Final inspection revealed that 1,000
units were incorrectly assembled. To correct each defective unit requires P0.50 for materials, P0.30 for
labor, and factory overhead of the appropriate rate. Then 20 units were classified as seconds and sold for
P5.00 each, the proceeds being credited to the order. The customer has agreed to accept the remaining
good machines, although the acceptable units are fewer than the number ordered.

Required:

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1. Entries if the method used is charged to specific job. 2. Entries if the method used is charged to all

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production

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3. Cost per unit of the finished goods if: a. Method used is charged to specific job
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b. Method used is charged to all production
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Problem 12
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The Marvin Corporation manufactures electrical equipment from specifications received from customers
Job 101 was for 1,000 motors to be used in a specially designed electrical complex. The following costs
ar stu

were determined for each motor:

is

Materials
Th

Labor
sh

Factory Overhead

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 117.00

100.00

83.00

It was discovered at final inspection that 33 motors did not meet the specifications established by the
customer. An examination indicated that 15 motors were beyond repair and should be sold as seconds
for P55.00 each, and the remaining 18 motors, although defective could be reconditioned as first quality
units by the addition of P1,650 for materials, P1,500 for labor, and P1,200 for factory overhead.

m
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co
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Required: 1. Journal entrics for all transactions given above. 2. Cost per unit of the finished goods.

o.
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o
aC s
vi y re
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ar stu
is
Th
sh

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