Ralph Co manufactures products on a job-order basis. Job 4 is an order for 100 u
ID: 2339857 • Letter: R
Question
Ralph Co manufactures products on a job-order basis. Job 4 is an order for 100 units. It requires $3,000 direct materials, $1,000 direct labor, and $1,500 overhead applied based on 150% the direct labor hours. After inspection, 2 units required rework which required $80 additional direct labor costs and $60 of materials.
(1) If the rework is considered normal spoilage due to the nature of the job, determine the cost of Job 4. Prepare the journal entry for overhead.
(2) If the rework is considered normal spoilage, determine the cost of Job 4. Prepare the journal entry for overhead.
(3) If the rework is considered abnormal spoilage, determine the cost of Job 4. Prepare the journal entry for overhead control?
Explanation / Answer
1.a) cost of Job 4.
b) Since all the costs are added to the Job order cost , no other entry is required for overhead control.
2.a) Considering it as a normal spoilage but not assinging it to Job 4, Cost sheet of Job 4 is as follows-
b)Overhead control cost
As the spoilage is normal as the rework cost is not directly assigned to Job 4 , the cost is charged to overhead control
3.a) If the spoilage is abnormal then the Job cost will be calculated as
b) Spoilage amount is same as calculated in 2.b above i.e. $260. The jounal entry is as under
Particulars Amount($) Direct Materials(3000+60) 3,060 Direct Labour(1000+80) 1,080 Overhead(1080*150%) 1,620 Total Cost 5,760Related Questions
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