Spoilage and job costing. (L. Bamber) Barrett Kitchens produces a variety of items in accordance with special job ordersfrom hospitals, plant cafeterias, and university dormitories. An order for 2,100 cases of mixed vegetables costs $9 percase: direct materials, $4; direct manufacturing labor, $3; and manufacturing overhead allocated, $2. The manufacturingoverhead rate includes a provision for normal spoilage. Consider each requirement independently.1. Assume that a laborer dropped 420 cases. Suppose part of the 420 cases could be sold to a nearby prison for $420cash. Prepare a journal entry to record this event. Calculate and explain briey the unit cost of the remaining 1,680 cases.2. Refer to the original data. Tasters at the company reject 420 of the 2,100 cases. The 420 cases are disposed of for $840.Assume that this rejection rate is considered normal. Prepare a journal entry to record this event, and do the following:a. Calculate the unit cost if the rejection is attributable to exacting specications of this particular job.b. Calculate the unit cost if the rejection is characteristic of the production process and is not attributable to this specicjob.c. Are unit costs the same in requirements 2a and 2b? Explain your reasoning briey.3. Refer to the original data. Tasters rejected 420 cases that had insufficient salt. The product can be placed in a vat, saltcan be added, and the product can be reprocessed into jars. This operation, which is considered normal, will cost $420.Prepare a journal entry to record this event and do the following: a. Calculate the unit cost of all the cases if this additionalcost was incurred because of the exacting specications of this particular job.b. Calculate the unit cost of all the cases if this additional cost occurs regularly because of difficulty in seasoning.c. Are unit costs the same in requirements 3a and 3b? Explain your reasoning briey.
Spoilage and
from hospitals, plant cafeterias, and university dormitories. An order for 2,100 cases of mixed vegetables costs $9 per
case: direct materials, $4; direct manufacturing labor, $3; and manufacturing
overhead rate includes a provision for normal spoilage. Consider each requirement independently.
1. Assume that a laborer dropped 420 cases. Suppose part of the 420 cases could be sold to a nearby prison for $420
cash. Prepare a
2. Refer to the original data. Tasters at the company reject 420 of the 2,100 cases. The 420 cases are disposed of for $840.
Assume that this rejection rate is considered normal. Prepare a journal entry to record this event, and do the following:
a. Calculate the unit cost if the rejection is attributable to exacting specications of this particular job.
b. Calculate the unit cost if the rejection is characteristic of the production process and is not attributable to this specic
job.
c. Are unit costs the same in requirements 2a and 2b? Explain your reasoning briey.
3. Refer to the original data. Tasters rejected 420 cases that had insufficient salt. The product can be placed in a vat, salt
can be added, and the product can be reprocessed into jars. This operation, which is considered normal, will cost $420.
Prepare a journal entry to record this event and do the following: a. Calculate the unit cost of all the cases if this additional
cost was incurred because of the exacting specications of this particular job.
b. Calculate the unit cost of all the cases if this additional cost occurs regularly because of difficulty in seasoning.
c. Are unit costs the same in requirements 3a and 3b? Explain your reasoning briey.
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