Question:
Spoiled goods; loss charged to factory overhead; loss charged to job
One of the tennis racquets that Set Point manufactures is a titanium model (Ace) that sells for $149. The cost of each Ace consists of:
|
Materials
|
35
|
|
Labor
|
15
|
|
Factory overhead
|
$25
|
|
Total
|
$75
|
Job 100 produced 100 Aces, of which 6 racquets were spoiled and classified as seconds. Seconds are sold to discount stores for $50 each.
Required:
1. Under the assumption that the loss from spoilage will be distributed to all jobs produced during the current period, use general journal entries to (a) record the costs of production, (b) put spoiled goods into inventory, and (c) record the cash sale of spoiled units.
2. Under the assumption that the loss due to spoilage will be charged to Job 100, use general journal entries to (a) record the costs of production, (b) put spoiled goods into inventory, and (c) record the cash sale of spoiled units.