Prudoe Compounds produces a variety of chemicals used by auto manufacturers in their painting processes. With each batch of chemicals produced, some spoilage naturally occurs. Prudoe Compounds includes normal spoilage cost in its predetermined OH rate. For 2013, Prudoe Compounds estimated the following: Overhead costs, other than spoilage Estimated spoilage cost Estimated sales value of spoiled materials Estimated direct labor hours $600,000 50,000 20,000 40,000 a. Prudoe Compounds applies overhead based on direct labor hours. Calculate the predetermined OH rate for 2013. b. For a batch of chemicals mixed in May 2013, the firm experienced normal spoilage on Job #788. The cost of the spoiled material amounted to $1,730 and the company estimated the salvage value of those materials to be $496. Journalize the entry for the spoilage.

Prudoe Compounds produces a variety of chemicals used by auto manufacturers in their painting processes. With each batch of chemicals produced, some spoilage naturally occurs. Prudoe Compounds includes normal spoilage cost in its predetermined OH rate. For 2013, Prudoe Compounds estimated the following: Overhead costs, other than spoilage Estimated spoilage cost Estimated sales value of spoiled materials Estimated direct labor hours $600,000 50,000 20,000 40,000 a. Prudoe Compounds applies overhead based on direct labor hours. Calculate the predetermined OH rate for 2013. b. For a batch of chemicals mixed in May 2013, the firm experienced normal spoilage on Job #788. The cost of the spoiled material amounted to $1,730 and the company estimated the salvage value of those materials to be $496. Journalize the entry for the spoilage.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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