Ang Tibay Cabinet Co. manufactures custom cabinets for modular and prefabricated housing companies. During the current period, an order for 1,000 custom cabinets was begun on job number 89621 for Baggy Housing Corp. Custom jobs are marked up 150 percent of cost. Total costs charged to job number 89621 are: 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 appropriate general journal entries assuming that spoilage were cause by (a) internal failure, (b) change in the specification made by customer.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Ang Tibay Cabinet Co. manufactures custom cabinets for modular and prefabricated housing companies. During the current period, an order for 1,000 custom cabinets was begun on job number 89621 for Baggy Housing Corp. Custom jobs are marked up 150 percent of cost. Total costs charged to job number 89621 are:
Materials
P 92,000
Labor(3,000 hours X P12 per hour)
36,000
Factory
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 appropriate general
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