Principles of Cost Accounting
17th Edition
ISBN: 9781305087408
Author: Edward J. Vanderbeck, Maria R. Mitchell
Publisher: Cengage Learning
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Chapter 2, Problem 19E
A machine shop manufactures a stainless steel part that is used in an assembled product. Materials charged to a particular job amounted to $600. At the point of final inspection, it was discovered that the material used was inferior to the specifications required by the engineering department; therefore, all units had to be scrapped.
Record the entries required for scrap under each of the following conditions:
- a. The revenue received for scrap is to be treated as a reduction in
manufacturing cost but cannot be identified with a specific job. The value of stainless steel scrap is stable and estimated to be $125 for this job. The scrap is sold two months later for cash at the estimated value of $125. - b. Revenue received for scrap is to be treated as a reduction in manufacturing cost but cannot be identified with a specific job. A firm price is not determinable for the scrap until it is sold. It is sold eventually for $75 cash.
- c. The production job is a special job, and the $85 received on account for the scrap is to be treated as a reduction in manufacturing cost. (A firm price is not determinable for the scrap until it is sold.)
- d. Only $40 cash was received for the scrap when it was sold in the following fiscal period. (A firm price is not determinable for the scrap until it is sold, and the amount to be received for the scrap is to be treated as other income.)
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Jack Company's production report for Job #901 showed that 5 vehicle parts out of 100
vehicle parts are spoiled. Costs assigned prior to the inspection point are P10,000 per
part. When the spoilage is detected, the spoiled goods were valued at P2,000 per part,
the net disposal value.
Required: Compute the following:
(1) Jack determined that the spoilage is caused by the specifications of a particular
job. What amount should be debited to factory overhead?
(2) Based on your answers to (1), how much is the cost per good unit?
(3) If the spoilage is a normal characteristic of the production process, what
amount should be debited to factory overhead?
(4) If the spoilage is abnormal, how much is the cost per good unit?
Do you agree with the following statements? Check only those with which you agree.
Choose All That Apply
At the end of the period, the balance remaining in Work in Process is carried forward to the next period.At the end of the period, the balance remaining in Work in Process is carried forward to the next period.
Burgess Company incurred costs of $50,000 to manufacture products during the period when no units were sold. No period costs will be reported in this regard on the company's income statement for the period. Burgess Company incurred costs of $50,000 to manufacture products during the period when no units were sold. No period costs will be reported in this regard on the company's income statement for the period.
Only manufacturing companies use a predetermined overhead application rate; such rates are not used by service companies.Only manufacturing companies use a predetermined overhead application rate; such rates are not used by service companies.
Service…
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Chapter 2 Solutions
Principles of Cost Accounting
Ch. 2 - What are the two major objectives of materials...Ch. 2 - Prob. 2QCh. 2 - What factors should management consider when...Ch. 2 - Prob. 4QCh. 2 - What kind of information and data are needed to...Ch. 2 - How would you define the term economic order...Ch. 2 - What kind of information and data are needed to...Ch. 2 - What factors should be considered when determining...Ch. 2 - Prob. 9QCh. 2 - Prob. 10Q
Ch. 2 - Prob. 11QCh. 2 - Proper authorization is required before orders for...Ch. 2 - Prob. 13QCh. 2 - Prob. 14QCh. 2 - Prob. 15QCh. 2 - Prob. 16QCh. 2 - Prob. 17QCh. 2 - Normally, a manufacturer maintains an accounting...Ch. 2 - Prob. 19QCh. 2 - Why do companies adopt the LIFO method of...Ch. 2 - Prob. 21QCh. 2 - Prob. 22QCh. 2 - Prob. 23QCh. 2 - Prob. 24QCh. 2 - Prob. 25QCh. 2 - Prob. 26QCh. 2 - Prob. 27QCh. 2 - Prob. 28QCh. 2 - A manufacturing process may produce a considerable...Ch. 2 - After a product is inspected, some units may be...Ch. 2 - Order Point Pershing, Inc. expects daily usage of...Ch. 2 - Economic order quantity; order cost; carrying cost...Ch. 2 - Economic order quantity; order cost; carrying cost...Ch. 2 - Journalizing materials requisitions Penrose...Ch. 2 - Recording materials transactions Prepare a journal...Ch. 2 - PurrChems raw materials records contained the...Ch. 2 - Using first-in, first-out perpetual inventory...Ch. 2 - LIFO costing Using last-in, first-out perpetual...Ch. 2 - Using the weighted average method of perpetual...Ch. 2 - Prob. 10ECh. 2 - Renfro, Inc. was franchised on January 1, 2016. At...Ch. 2 - Recording materials transactions Craig Products...Ch. 2 - Recording materials transactions Broadwell...Ch. 2 - JIT and cost control Matsui Industries produces...Ch. 2 - Kenkel, Ltd. uses backflush costing to account for...Ch. 2 - For E2-15, prepare any journal entries that would...Ch. 2 - Davis Co. uses backflush costing to account for...Ch. 2 - For E2-17, prepare any journal entries that would...Ch. 2 - A machine shop manufactures a stainless steel part...Ch. 2 - Spoiled work Roger Company manufactures tennis...Ch. 2 - Defective work Herbert Electronics manufactures an...Ch. 2 - Perry Co. predicts it will use 25,000 units of...Ch. 2 - Prob. 2PCh. 2 - Economic order quantity; tabular computation Lopez...Ch. 2 - In P2-3, assume that the company desires a safety...Ch. 2 - Inventory costing methods The purchases and issues...Ch. 2 - Inventory costing methods The following...Ch. 2 - Terrills Transmissions uses a job order cost...Ch. 2 - Prob. 8PCh. 2 - Tuscany Products, Inc. uses a job order cost...Ch. 2 - Prob. 10PCh. 2 - JIT and cost control Langray, Ltd. produces 50,000...Ch. 2 - Backflush costing Russell Corp. uses backflush...Ch. 2 - Webster Company uses backflush costing to account...Ch. 2 - An examination of Buckhorn Fabricators records...Ch. 2 - One of the tennis rackets that Ace Sporting Goods...Ch. 2 - Lloyd Industries manufactures electrical equipment...Ch. 2 - Review Problem for Chapters 1 and 2 UltraLift...Ch. 2 - Financial and Nonfinancial Aspects of Changing to...Ch. 2 - Prob. 2MC
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