![Principles of Cost Accounting](https://www.bartleby.com/isbn_cover_images/9781305087408/9781305087408_largeCoverImage.gif)
Principles of Cost Accounting
17th Edition
ISBN: 9781305087408
Author: Edward J. Vanderbeck, Maria R. Mitchell
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Textbook Question
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.)
Expert Solution & Answer
![Check Mark](/static/check-mark.png)
Trending nowThis is a popular solution!
![Blurred answer](/static/blurred-answer.jpg)
Students have asked these similar questions
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…
Burlington Textiles has some spoiled goods that had an assigned cost of $40,000 and zero net disposal value.
Prepare a journal entry for each of the following conditions under (a) process costing (department A) and (b) job costing:
1. Abnormal spoilage of $40,000
2. Normal spoilage of $40,000 regarded as common to all operations
3. Normal spoilage of $40,000 regarded as attributable to specifications of a particular job
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
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Lloyd Industries manufactures electrical equipment from specifications received from customers. Job X10 was for 1,000 motors to be used in a specially designed electrical complex. The followingcosts were determined for each motor: At final inspection, Lloyd discovered that 33 motors did not meet the exacting specifications established by the customer. Anexamination indicated that 18 motors were beyond repair andshould be sold as spoiled goods for 75 each. The remaining15 motors, though defective, could be reconditioned as first-qualityunits by the addition of 1,650 for materials, 1,500 for labor, and1,200 for factory overhead. Required: Prepare the journal entries to record the following: 1. The scrapping of the 18 motors, with the income from spoiledgoods treated as a reduction in the manufacturing cost of thespecific job. 2. The correction of the 15 defective motors, with the additionalcost charged to the specific job. 3. The additional cost of replacing the 18 spoiled motors with newmotors. 4. The sale of the spoiled motors for 75 each. 5. If the reconditioned motors sell for 400 each, is Lloyd betteroff reconditioning the defective motors or selling them as isfor 75 as spoiled goods?arrow_forwardKindly answer the 2 questions.arrow_forwardAssume that the defective goods were charged to all jobs, what is the cost transferred to finish goods at the end of the year? KW Inc. manufactured coil over springs for cars. During this year, KW Inc. manufactured 200 units coil over springs. After final inspection, it was determined that 15 units were defective. The cost per unit to rework the defective units were the following: P100 for direct materials, P160 for direct labor and the appropriate factory overhead rate. The following were the unit cost for the 200 coil over springs: Direct materials P800 Direct labor P350 Applied overhead 160% of direct labor cost (150% in case defective units were charged to specific order) 342,000 O 335,000 349,740 342,500arrow_forward
- The Russell Company has an extensive job-costing facility that uses a variety of metals. Consider each requirement independently. Q. The scrap from Job 372 consists of a metal used by many other jobs. No record is maintained of the scrap generated by individual jobs. Assume that scrap is accounted for at the time of its sale. Scrap totaling $4,500 is sold. Prepare two alternative journal entries that could be used to account for the sale of scrap.arrow_forward(d) Prepare the journal entries for the:▪ assignment of direct materials, direct labour incurred, and the manufacturing overhead applied tothe Polishing Process▪ cost of the units completed and transferred out to the Packaging Process (e) Given that 30% of the unexpected losses were because of pilferage, prepare the abnormal spoilagestatement, clearly showing All Things Brass true loss associated with the Polishing Process.arrow_forwardIn good accounting form, what amount should be debited to Factory overhead control to record spoilage pertaining to unrecovered cost?arrow_forward
- Blue Co.'s Job 405 for the manufacture of 2,200 wagons was completed during August at the unit costs presented below. Direct materials $24 Direct labor 18 Factory overhead 14 $56 Final inspection of Job 405 disclosed 200 spoiled wagons that were sold to a jobber for $6,000. Assume that spoilage loss is attributable to the exacting specifications of Job 405 and is charged to this specific job. What would be the unit cost of the good wagons produced on Job 405?arrow_forward(i) Purchased raw materials on account OMR86,300. (ii) Raw materials of OMR73,900 were requisitioned to the factory. An analysis of the materials requisition slips indicated that OMR6,800 was classified as indirect materials. (iii) Factory labor costs incurred were OMR53,900, of which OMR51,000 pertained to factory wages payable and OMR2,900 pertained to employer payroll taxes payable. Instructions: Journalize the transactions. (Omit explanations.)arrow_forwardYour company completed the site work for the South Pointe office complex. The costs are shown in the following table. The site concrete labor and landscaping were done by subcontractors. The demolition and grubbing and grading, and excavation were done by the company's excavation crew. The company's minimum profit and overhead markup is 17%. Determine the profit generated by the project management. Job: 411 South Pointe Site Work Code 2050 2100 2610 Site Conc.-Labor 2620 Site Conc.-Concrete 2700 Landscaping 525 Description Demolition & Grubbing Grading & Excavation 1438 963 438 Job Total Contract Amount 138,000 Billed To Date 128,000 Actual 33,562 20,500 19,200 9,375 37.500 120.137 -Costs- Budget 35,000 19,500 19,200 9.900 37.500 121.100 May 15, 2004 Ovemin -1.438 1.000 0 -$25 0 -963arrow_forward
- PVW Company manufactures products to customer specifications. A job costing system is used to accumulate production costs. During the month of September, an order (Job X2) by a customer comprised 5,000 units of the product; manufacturing cost is $5.00 per unit. The processing of this job, however, resulted in spoilage of 400 units, considered normal with no disposal value, attributable to this specific job. Required: How will you account for the above transaction, for example, in a journal entry? Determine the unit cost showing computations.arrow_forwardDengerarrow_forwardState the journal entries necessary to record the assignment of direct materials, direct manufacturing wages and manufacturing overhead applied to the Baking Department. Also give the journal entries to record the cost of goods completed and transferred to the Spraying Department. Given that 25% of the unexpected losses were because of pilferage, prepare the abnormal spoilage statement, clearly showing Michael Pottery’s true loss.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Principles of Cost AccountingAccountingISBN:9781305087408Author:Edward J. Vanderbeck, Maria R. MitchellPublisher:Cengage LearningCornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
![Text book image](https://www.bartleby.com/isbn_cover_images/9781305087408/9781305087408_smallCoverImage.gif)
Principles of Cost Accounting
Accounting
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Cengage Learning
![Text book image](https://www.bartleby.com/isbn_cover_images/9781305970663/9781305970663_smallCoverImage.gif)
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
Job Costing and Spoilage | Topic 2 | Spoilage, Re-work, and Scrap; Author: Samantha Taylor;https://www.youtube.com/watch?v=VP55_W2oXic;License: CC-BY