Problem 18-40
Spoilage in job costing. Textual Deviance is a manufacturer of writing products for aspiring indie authors.
Winston Smith, the plant manager of Textual Deviance, obtains the following information for Job # 10 in Augustt
A total of 46 units were started, and 6 spoiled units were detected and rejected at final inspection, yeilding 40 good
The spoiled units were considered to be normal spoilage Costs assigned prior to this inspection point are $1,100 pe
The current disposal price of the spoiled units is $235 per unit. When the spoilage is detected, the spoiled goods ar
1). What is the normal spoilage rate?
2). Prepare the journal entries to record the normal spoilage, assuming the following:
a. The spoilage is related to a specific job.
b. The sspoilage is common to all job.
c. The spoilage is considered to be abnormal spoilage.
1). What is the normal spoilage rate?
Spoiled Units 6
Total Units Produced 40 x 100%
Normal Spoilage Rate 15%
2).
a. The spoilage is related to a specific job.
Work In Process Control ( 6 spoiled parts x $1,100 per unit) 6,600
Materials Control
To recognized spoiled parts
Materials Control -Spoiled Goods (6 units x $235 per unit) 1,410
Work in Process control - Specific Job
To recognized the disposal value
b. The sspoilage is common to all job.
Materials Control -Spoiled Goods (6 units x $235 per unit) 1,410
Manufacturing Overhead control - Normal Spoilage ($6600 - 1410) 5,190
Work in Process control - Specific Job
c. The spoilage is considered to be abnormal spoilage.
Materials Control -Spoiled Goods (6 units x $235 per unit) 1,410
Loss from Abnormal Spoilage ($6600- $1410) 5,190
Work in Process control - Specific Job
ng indie authors.
mation for Job # 10 in Augustt 2017
inspection, yeilding 40 good units.
pection point are $1,100 per unit.
tected, the spoiled goods are inventoried at $ 235 per unit.
6,600
1,410
6,600
6,600
Problem 18-41
Rework in job costing, journal entry (contination of 18-40). Assume that the 6 spoiled units of
Textual Deviance Machine Shop's Job #10 can be reworked for a total cost of $1800. A total cost of $6,600
associated with these units has already been assigned to job #10 before the rework.
Prepare Journal entries to rework , assuming the following:
a). The rework is related to a specific job.
b). The rework is common to all jobs.
c). The rework is considered to be abnormal.
a). The rework is related to a specific job.
Work in Process Control (specific job) 1800
Various Accounts 1800
b). The rework is common to all jobs.
Manufacturing Overhead Control (Rework Cost) 1800
Various Accounts 1800
c). The rework is considered to be abnormal.
Loss From Abnormal Rework 1800
Various Accounts 1800
A total cost of $6,600
Problem 18-42
Scrap at time of sale or at time of production , journal entries (continuation of 18-40 ). Assume that Job #10
of Textual Deviance generates normal scrap with a total sales value of $700 (it is assumed that the scrap returned
to storeroom is sold quickly)
Prepare Journal entries for the recognition of scrap, assuming the following:
a). The value of scrap is immaterial and scrap is recognized at the time of sale.
b). The value of scrap is material, is related to a specific job, and is recognized at the time of sale.
c). The value of scrap is material, is common to all jobs, and is recognized at the time of sale.
d). The value of scrap is material , and scrap is recognized as inventory at the time of production and is recorded
at its net realizable value.
a). The value of scrap is immaterial and scrap is recognized at the time of sale.
Cash/ Accounts receivable 700
Scrap Revenue 700
b). The value of scrap is material, is related to a specific job, and is recognized at the time of sale.
Cash/ Accounts receivable 700
Work in Process Control 700
c). The value of scrap is material, is common to all jobs, and is recognized at the time of sale.
Cash/ Accounts receivable 700
Manufacturing Overhead Control 700
d). The value of scrap is material , and scrap is recognized as inventory at the time of production and is recorded
at its net realizable value.
Materials Control 700
Work in Process Control 700
Cash/ Accounts receivable 700
Materials Control 700
0 ). Assume that Job #10
umed that the scrap returned
he time of sale.
of production and is recorded
he time of sale.
of production and is recorded
