Barkeley Manufacturing Shop produces parts and uses a job costing system. During

Question

Barkeley Manufacturing Shop produces parts and uses a job costing system. During the previous month, the company manufactured 5,000 parts in Job #56. Costs per part in Job #56 were: Direct materials $4.50 Direct labor .50 Manufacturing overhead 3.00 When the units were tested after production, 500 parts did not meet specifications. The defects were normal and expected (i.e. were an unavoidable part of the production process, not caused by the job). 400 of the units were corrected, by an outside repair shop, at a cost of $1.00 per unit. 100 units could not be corrected. It was expected that they would be sold for $5 each. Barkeley considered the cost (and related sales value) of the spoiled goods to be significant to the job. There was also some scrap materials that resulted from the job. Barkeley found a company interested in purchasing the scrap for $75 cash. Barkeley recognizes revenues from sales of scrap when sold. Prepare journal entries to account for the following: The cost to repair the defective parts. (Assume that all costs are payable in the following month.) The costs (and related sales value) of the spoiled goods. The sale of scrap materials. Determine the unit cost of the parts transferred to Finished Goods. (If necessary, round to two decimals.)

Explanation / Answer

Solution:

(A). Journal Entries:

(1). Repaires A/c Dr 400

Cash (or) Accounts Payable A/c 400

(2). Spoiled Goods A/c Dr 100 Units

Finished Stock A/c 100 Units

  

(3). Cash A/c Dr 500

Scrap Revenue A/c 500

(4). Finished Goods Caluculation:

   Begining Inventory ( 500 * 56 ) 28,000

Less: Spoiled Goods ( 100 * 56 ) 5,600

   Less: Repaires ( 400 * 1 ) 400

= 22,000

   Less: Sale of Goods ( 400 * 75) = 30,000

Ending Finshed Goods Inventory = 8,000

Related Questions

Navigate

• Browse (All)
• Browse B
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.