Problem 4. Evergreen Manufacturing Company started 1,500 units in process on job order #2003. The prime cost placed in process consisted of P300,000 and P180,000 for materials and direct labor, respectively, and a predetermined rate was used to charge factory overhead to production at 133-1/3% of direct labor cost. Upon completion of the job order, 100 units were rejected for failure to meet strict quality control requirements. The company bills customers at 50% above cost but sells rejected units at only 1/3 of production cost. REQUIRED: Give the entries to record the following: 1) The cost of production 2) To record the completion of the job assuming the rejected units is ascribed to a company failure which is normal.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Problem 4. Evergreen Manufacturing Company started 1,500 units in process on job
order #2003. The prime cost placed in process consisted of P300,000 and P180,00 for
materials and direct labor, respectively, and a predetermined rate was used to charge
factory overhead to production at 133-1/3% of direct labor cost. Upon completion of the
job order, 100 units were rejected for failure to meet strict quality control requirements.
The company bills customers at 50% above cost but sells rejected units at only 1/3 of
production cost.
REQUIRED: Give the entries to record the following:
1) The cost of production
2) To record the completion of the job assuming the rejected units is ascribed to a
company failure which is normal.
Transcribed Image Text:Problem 4. Evergreen Manufacturing Company started 1,500 units in process on job order #2003. The prime cost placed in process consisted of P300,000 and P180,00 for materials and direct labor, respectively, and a predetermined rate was used to charge factory overhead to production at 133-1/3% of direct labor cost. Upon completion of the job order, 100 units were rejected for failure to meet strict quality control requirements. The company bills customers at 50% above cost but sells rejected units at only 1/3 of production cost. REQUIRED: Give the entries to record the following: 1) The cost of production 2) To record the completion of the job assuming the rejected units is ascribed to a company failure which is normal.
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