Job-Order Costing - Lost Units
Job-Order Costing - Lost Units
2. Work-in-process 7,000
Factory overhead 3,000
Raw materials inventory 10,000
3. Work-in-process 16,000
Factory overhead 4,000
Payroll 20,000
4. Work-in-process 18,000
Factory overhead 18,000
USP 50
DM 5.00
DL 3.00
FOH 2.00
UC 10.00
NRV 6.00
Spoilage loss 4.00
Internal - FOH
Customer specification - WIP
DM 5.00
DL 3.00
FOH 2.00
Rework Costs 10.00
Internal - FOH
Customer specification - WIP
Spoilage loss
Materials P 46,000
Labor (1,000 hours X P14 per hour) 14,000
Factory overhead (P30 per labor hour) 30,000
Total cost charged to job number 3387 P 90,000
Required:
1. Assuming that the defective units are the result of an internal failure (that is, an
employee error or a machine failure), prepare the appropriate general journal entry to
record the transfer of the defective units to Spoiled Goods Inventory and the shipment
of Job Number 3387 to the customer.
2. Assuming that the defective units are the result of a change in design specified by
the customer after the units are completed, prepare the appropriate general journal
entry to record the transfer of the defective units to Spoiled Goods Inventory and the
shipment of Job Number 3387 to the customer.
Internal Failure
that require casting, such as engine
DM 9.20
rent period, an order for 5,000
R pump Company. After the job was DL 2.80 1. WIP - Materials
its were determined to be defective. FOH 6.00 WIP - Labor
nly 4,800 units instead of the Unit Cost 18.00 WIP - FOH
sold a seconds for P15 each.
rate from Finished Goods. Total NRV 15.00 Raw materials inventory
Spoilage loss 3.00 Payroll
Factory overhead
= 86,400
4800
= 18
nal Failure Customer Specification
86,400 OR
44,160
13,440 Spoiled goods inventory 3,000
28,800 WIP - Materials 1,533
WIP - Labor 467
WIP - FOH 1,000
= Total Cost
Total Good Units
= 87,000
4800
= 18.125
Materials P 92,000
Labor (3,000 hours X P12 per hour) 36,000
Factory overhead (P24 per labor hour) 72,000
On inspection, 100 of the cabinets were found to have defects. Materials costing P4 and
½ hour of labor are required to correct each defective unit. Factory overhead is charged
to production on the basis of direct labor hours.
Required:
Prepare the appropriated general journal entries assuming that spoilage were cause by
(a) internal failure, (b) change in the specification made by the customer.
modular and prefabricated housing Original Rework costs Int
,000 custom cabinets was begun on
obs are marked up 150 percent of DM 92.00 4.00
DL 36.00 6.00 1.
FOH 72.00 12.00
Unit Cost 200.00 22.00
2.
ve defects. Materials costing P4 and
e unit. Factory overhead is charged
3.
uming that spoilage were cause by
ade by the customer.
=
UC
=
Internal Failure Customer Specification
200 = 202200
1000
= 202.20
92,000
36,000
72,000
92,000
36,000
72,000
400
600
1,200
400
600
1,200
202,200
92,400
36,600
73,200
200.000
2.200
202.200
F. Company had a production run of 8,000 pairs of slacks during the last week of June,
at the following costs per pair:
Materials P 50
Labor 40
Factory overhead (includes P7.00 allowance for spoiled work) 30
Final inspection revealed 600 pairs not meeting quality standards, salable as seconds
at P40.00 per paid.
Required:
1. Prepare the journal entries assuming the loss is charged to the production run.
2. Prepare the journal entries assuming the loss is to be charged to all production run.
Internal Failure
DM 50.00
DL 40.00 1. WIP - Materials 400,000
FOH 30.00 WIP - Labor 320,000
Unit Cost 120.00 WIP - FOH 240,000
NRV 40.00 Raw materials inventory 400,000
Spoilage loss 80.00 Payroll 320,000
Factory overhead 240,000
UC = Total Cost
Total Good Units
= 888000
7400
= 120.00
Customer Specification
OR
= Total Cost
Total Good Units
= 880000
7400
= 118.92
Final inspection revealed that 75 of the units were improperly riveted. Correction of each
defective unit requires P2.00 for materials, P3.00 for labor, and factory overhead at the
appropriate rate.
Required:
1. Assume the order is charged with the cost of defective work, prepare the necessary
journal entries in the books.
2. Assume the cost of correcting the defective work is not charged to the specific order,
prepare the necessary journal entries in the books.
r from A Supply Internal Failure Internal Failure
P40; labor, P17.50;
in which any
Original Rework costs 1.
DM 40.00 2.00
DL 17.50 3.00
Correction of each
y overhead at the FOH 28.00 4.80
Unit Cost 85.50 9.80
=
UC
=
Internal Failure Customer Specification
85.50 = 84462.50
1000
= 84.4625
1,037.50
Unit cost before rework
Allowance (1037.50/1,000)
Unit cost after rework
mer Specification
40,000
17,500
26,250
40,000
17,500
26,250
150.00
225.00
337.50
150.00
225.00
337.50
84,462.50
40,150.00
17,725.00
26,587.50
85.500
(1.038)
84.4625