Kyralei Co. manufacture golf carts and other recreational equipment. One order for RAGC Corporation for 2,000 carts showed the following costs per unit: direct materials P400; direct labor P200; and factory overhead applied at 140% of direct labor cost if defective work is charged to a specific job and 150% if defective work is charged to all jobs. Final inspection revealed that wheels were assembled with improper bearings. The wheels were disassembled and the proper bearings inserted. The cost of correcting each defective cart consists of P20 added cost for bearings, P40 for labor, and factory overhead at the predetermined rate. Required: A. Prepare journal entries to record correction of the defective units and transfer of the work in process to finished goods if: 1. The RAGC is to be charged with the cost of defective units. 2. The cost of correcting the defective units is not charged to RAGC. B. Compute the cost per unit of finished goods if: 1. The RAGC is to be charged with the cost of defective units 2. The cost of correcting the defectivc units is not charged to RAGC
Kyralei Co. manufacture golf carts and other recreational equipment. One order for RAGC Corporation for 2,000 carts showed the following costs per unit: direct materials P400; direct labor P200; and factory overhead applied at 140% of direct labor cost if defective work is charged to a specific job and 150% if defective work is charged to all jobs. Final inspection revealed that wheels were assembled with improper bearings. The wheels were disassembled and the proper bearings inserted. The cost of correcting each defective cart consists of P20 added cost for bearings, P40 for labor, and factory overhead at the predetermined rate. Required: A. Prepare journal entries to record correction of the defective units and transfer of the work in process to finished goods if: 1. The RAGC is to be charged with the cost of defective units. 2. The cost of correcting the defective units is not charged to RAGC. B. Compute the cost per unit of finished goods if: 1. The RAGC is to be charged with the cost of defective units 2. The cost of correcting the defectivc units is not charged to RAGC
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Problem 8
Transcribed Image Text:de good units under (a) and (b)
Problem 8
Kyralei Co. manufacture golf carts and other recreational equipment. One order for
RAGC Corporation for 2,000 carts showed the following costs per unit: direct
materials - P400; direct labor P200; and factory overhead applied at 140% of direct
Jabor cost if defective work is charged to a specific job and 150% if defective work is
charged to a!! jobs.
Final inspection revealed that wheels were assembled with improper bearings. The
wheels were disassembled and the proper bearings inserted. The cost of correcting
each defective cart consists of P20 added cost for bearings, P40 for labor, and factory
overhead at the predetermined rate.
Required:
A. Prepare journal entries to record correction of the defective units and transfer of
the work in process to finished goods if:
1. The RAGC is to be charged with the cost of defective units.
2. The cost of correcting the defective units is not charged to RAGC.
B. Compute the cost per unit of finished goods if:
1. The RAGC is to be charged with the cost of defective units
2. The cost of correcting the defectivc units is not charged to RAGC
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