Sei sulla pagina 1di 2

Job-order costing, lost units lecture notes

PROBLEM 1

P Foundry Inc. manufactures custom metal products that require casting, such as engine
blocks, pistons, and engine housings. During the current period, an order for P5,000 custom
housing was begun on job number 3387 for R pump Company. After the job was completed,
the housings were inspected and 200 units were determined to be defective. The customer
has agreed to accept the order with only 4,800 units instead of the quantity originally
ordered. The spoiled units can be sold a seconds for P15 each. Spoiled goods are kept in an
inventory account separate from Finished Goods. Total costs charged to job number 3387
are:

Materials P 46,000
Labor (1,000 hours X P14 per hour) 14,000
Factory overhead (P30 per labor hour) 30,000
Total cost charged to job number 3387 P 90,000

Required:
1. Assuming that the defective units are the result of an internal failure (that is, an
employee error or a machine failure), prepare the appropriate general journal entry
to record the transfer of the defective units to Spoiled Goods Inventory and the
shipment of Job Number 3387 to the customer.
2. Assuming that the defective units are the result of a change in design specified by
the customer after the units are completed, prepare the appropriate general journal
entry to record the transfer of the defective units to Spoiled Goods Inventory and the
shipment of Job Number 3387 to the customer.

PROBLEM 2

Troy Cabinet Co. manufactures custom cabinets for modular and prefabricated housing
companies. During the current period, an order for 1,000 custom cabinets was begun on job
number 89621 for Baggy Housing Corp. custom jobs are marked up 150 percent of cost.
Total costs charged to job number 89621 are:

Materials P 92,000
Labor (3,000 hours X P12 per hour) 36,000
Factory overhead (P24 per labor hour) 72,000

On inspection, 100 of the cabinets were found to have defects. Materials costing P4 and
hour of labor are required to correct each defective unit. Factory overhead is charged to
production on the basis of direct labor hours

Required:
Prepare the appropriated general journal entries assuming that spoilage were cause by (a)
internal failure, (b) change in the specification made by the customer.

Page 1 of 2
Job-order costing, lost units lecture notes

PROBLEM 3

F. Company had a production run of 8,000 pairs of slacks during the last week of June, at the
following costs per pair:

Materials P 50.00
Labor 40.00
Factory overhead (includes P7.00 allowance for spoiled work) 30.00

Final inspection revealed 600 pairs not meeting quality standards, salable as seconds at
P40.00 per paid.

Required:
1. Prepare the journal entries assuming the loss is charged to the production run.
2. Prepare the journal entries assuming the loss is to be charged to all production run.

PROBLEM 4

Fabricators manufactures jacks and other lifting equipment. One order from A Supply House
for 1,000 jack s showed the following costs per unit: materials, P40; labor, P17.50; factory
overhead applied at 160% of direct labor cost (150%) in cases in which any defective units
costs are to be charged to a specific order.)

Final inspection revealed that 75 of the units were improperly riveted. Correction of each
defective unit requires P2.00 for materials, P3.00 for labor, and factory overhead at the
appropriate rate.

Required:
1. Assume the order is charged with the cost of defective work, prepare the necessary
journal entries in the books.
2. Assume the cost of correcting the defective work is not charged to the specific order,
prepare the necessary journal entries in the books.

Page 2 of 2

Potrebbero piacerti anche