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In preparation for the 2022 English Week Celebration, Beacon Hills High School Student’s council entered into a contract with Beacon Clothing which shall produce 180 organizational shirts with the following costs: Materials – P 8,000; Direct Labor – P 5,500 and Applied Overhead – P 4,500.   Before the delivery, it was found out that a rework has to be done for all of the 180 shirts. As a consequence, additional P 5.00 for the materials, P 2.00 for labor and P 3.00 for overhead will be spent for each defective shirt with Beacon Clothing charges its customer at 50% above cost. FIND: Assume that the rework is due to internal failure: How much should be charged to Work In Process to record production before rework? How much should be charged to Work In Process to record the rework? What is the total cost of the 180 shirts delivered to Beacon Hills High School Student’s council? How much should Beacon Hills High School Student’s council pay for the 180 shirts? How much should each of the 180 students pay assuming that 10% discount was given by the supplier?

In preparation for the 2022 English Week Celebration, Beacon Hills High School Student’s council entered into a contract with Beacon Clothing which shall produce 180 organizational shirts with the following costs: Materials – P 8,000; Direct Labor – P 5,500 and Applied Overhead – P 4,500.   Before the delivery, it was found out that a rework has to be done for all of the 180 shirts. As a consequence, additional P 5.00 for the materials, P 2.00 for labor and P 3.00 for overhead will be spent for each defective shirt with Beacon Clothing charges its customer at 50% above cost. FIND: Assume that the rework is due to internal failure: How much should be charged to Work In Process to record production before rework? How much should be charged to Work In Process to record the rework? What is the total cost of the 180 shirts delivered to Beacon Hills High School Student’s council? How much should Beacon Hills High School Student’s council pay for the 180 shirts? How much should each of the 180 students pay assuming that 10% discount was given by the supplier?

Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter10: Property, Plant And Equipment: Acquisition And Subsequent Investments
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Problem 7P: Self-Construction Olson Machine Company manufactures small and large milling machines. Selling...
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In preparation for the 2022 English Week Celebration, Beacon Hills High School Student’s council entered into a contract with Beacon Clothing which shall produce 180 organizational shirts with the following costs:

Materials – P 8,000; Direct Labor – P 5,500 and Applied Overhead – P 4,500.

 

Before the delivery, it was found out that a rework has to be done for all of the 180 shirts. As a consequence, additional P 5.00 for the materials, P 2.00 for labor and P 3.00 for overhead will be spent for each defective shirt with Beacon Clothing charges its customer at 50% above cost.

FIND: Assume that the rework is due to internal failure:

  1. How much should be charged to Work In Process to record production before rework?
  2. How much should be charged to Work In Process to record the rework?
  3. What is the total cost of the 180 shirts delivered to Beacon Hills High School Student’s council?
  4. How much should Beacon Hills High School Student’s council pay for the 180 shirts?
  5. How much should each of the 180 students pay assuming that 10% discount was given by the supplier?

 

 

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