Problem: Spoilage in job costing
Jellyfish Machine Shop is a manufacturer of motorized carts for vacation resorts.
Patrick Cullin, the plant manager of Jellyfish, obtains the following information for Job #10 in August. A total of 46 units were started, and 6 spoiled units were detected and rejected at final inspection, yielding 40 good units. The spoiled units were considered to be normal spoilage. Costs assigned prior to the inspection point are $1,100 per unit. The current disposal price of the spoiled units is $235 per unit. When the spoilage is detected, the spoiled goods are inventoried at $235 per unit.
Task
A. What is the normal spoilage rate?
B. Prepare the journal entries to record the normal spoilage, assuming the following:
a. The spoilage is related to a specific job.
b. The spoilage is common to all jobs.
c. The spoilage is considered to be abnormal spoilage.