La Trinidad Metal Shop, manufactures metal products that require casting, such as engine blocks, pistons and engine housings. During the current year, an order of 30,000 custom housing was begun on job number 202 for Mr. Pico. After the job was completed, the housing was inspected and 4% of the units were determined to be defective. Mr. Pico agreed to accept the good units only at 140% of cost. The spoiled units can be sold as seconds for P15 each. Spoiled goods are kept in an inventory account separate from finished goods. Total costs charged to job #202 are: Materials - P276,000;
La Trinidad Metal Shop, manufactures metal products that require casting, such as engine blocks, pistons and engine housings. During the current year, an order of 30,000 custom housing was begun on job number 202 for Mr. Pico. After the job was completed, the housing was inspected and 4% of the units were determined to be defective. Mr. Pico agreed to accept the good units only at 140% of cost. The spoiled units can be sold as seconds for P15 each. Spoiled goods are kept in an inventory account separate from finished goods. Total costs charged to job #202 are: Materials - P276,000; Labor (6,000hrs @ P14 per hour) is P84,000 and factory
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