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 5,000 custom housings 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 as seconds 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: Assuming that the defective units are the result of an internal failure (that is, 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. 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.
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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 5,000 custom housings 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 as seconds 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:
Assuming that the defective units are the result of an internal failure (that is, employee error or a machine failure, prepare the appropriate general
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.
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