E-3 Spoilage Valencia Plastics Company uses job order costs system to account for its production costs. During the current period, 1,000 chairs were molded and assembled on job order number 304. The total cost incurred on the job is: Materials Labor (2,500 hours x P20/hr.) Factory Overhead 200% of direct labor cost Total cost of Job No. 304 P120,000 50,000 100.000 P270.000 $270/ chalo Inspection was made at the end of the process and 100 chairs were found to be defective beyond repair, due to excusable negligence on the part of certain workers. The spoiled chairs can be sold at a salvage value of. P100 each. The company maintains a separate Spoiled Goods Inventory for defective product charges the unrecoverable cost of spoilage to Factory Overhead Control.

FINANCIAL ACCOUNTING
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ISBN:9781259964947
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Chapter1: Financial Statements And Business Decisions
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E-3
Spoilage
Valencia Plastics Company uses job order costs system to account for its
production costs. During the current period, 1,000 cchairs were molded and
assembled on job order number 304. The total cost incurred on the job is:
Materials
Labor (2,500 hours x P20/hr.)
Factory Overhead at 200% of
direct labor cost
Total cost of Job No. 304
P120,000
2050,000
100.000
P270.000
$270/
chalo
Inspection was made at the end of the process and. 100 chairs were found to be
defective beyond repair, due to excusable negligence on the part of certain
workers. The spoiled chairs can be sold at a salvage value of P100 each. The
company maintains a separate Spoiled Goods Inventory for defective product
charges the unrecoverable cost of spoilage to Factory Overhead Control.
Required: Journal entries to record the transactions, assuming that spot
chargeable to production as internal failure cost.
174
Transcribed Image Text:E-3 Spoilage Valencia Plastics Company uses job order costs system to account for its production costs. During the current period, 1,000 cchairs were molded and assembled on job order number 304. The total cost incurred on the job is: Materials Labor (2,500 hours x P20/hr.) Factory Overhead at 200% of direct labor cost Total cost of Job No. 304 P120,000 2050,000 100.000 P270.000 $270/ chalo Inspection was made at the end of the process and. 100 chairs were found to be defective beyond repair, due to excusable negligence on the part of certain workers. The spoiled chairs can be sold at a salvage value of P100 each. The company maintains a separate Spoiled Goods Inventory for defective product charges the unrecoverable cost of spoilage to Factory Overhead Control. Required: Journal entries to record the transactions, assuming that spot chargeable to production as internal failure cost. 174
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