Principles of Cost Accounting
17th Edition
ISBN: 9781305087408
Author: Edward J. Vanderbeck, Maria R. Mitchell
Publisher: Cengage Learning
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Chapter 2, Problem 19E
A machine shop manufactures a stainless steel part that is used in an assembled product. Materials charged to a particular job amounted to $600. At the point of final inspection, it was discovered that the material used was inferior to the specifications required by the engineering department; therefore, all units had to be scrapped.
Record the entries required for scrap under each of the following conditions:
- a. The revenue received for scrap is to be treated as a reduction in
manufacturing cost but cannot be identified with a specific job. The value of stainless steel scrap is stable and estimated to be $125 for this job. The scrap is sold two months later for cash at the estimated value of $125. - b. Revenue received for scrap is to be treated as a reduction in manufacturing cost but cannot be identified with a specific job. A firm price is not determinable for the scrap until it is sold. It is sold eventually for $75 cash.
- c. The production job is a special job, and the $85 received on account for the scrap is to be treated as a reduction in manufacturing cost. (A firm price is not determinable for the scrap until it is sold.)
- d. Only $40 cash was received for the scrap when it was sold in the following fiscal period. (A firm price is not determinable for the scrap until it is sold, and the amount to be received for the scrap is to be treated as other income.)
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(d) State the journal entries necessary to record the assignment of direct materials, direct manufacturing wages and manufacturing overhead applied to Process 2. Also give the journalentries to record the cost of goods completed and transferred to finished goods. (e) Given that 20% of the unexpected losses were as a result of pilferage, prepare the abnormal spoilage statement, clearly showing Better Choice’s true loss.
1) Braintree Ltd. manufactures coats in a large facility.
One area in the production facility is an underused
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offers to lease out this facility. This situation is an
example of what costing concept? How should Braintree
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2) Whitman Products and Rockland Industries report the
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48,000
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The accountant of Astera Ltd has identified the following types of environmental costs for the business:
Cleaning of exhaust fans at production sites
Defective products and waste produced in manufacturing
Development of water pollution monitoring systems
Fine for leaking waste water into the local river
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Chapter 2 Solutions
Principles of Cost Accounting
Ch. 2 - What are the two major objectives of materials...Ch. 2 - Prob. 2QCh. 2 - What factors should management consider when...Ch. 2 - Prob. 4QCh. 2 - What kind of information and data are needed to...Ch. 2 - How would you define the term economic order...Ch. 2 - What kind of information and data are needed to...Ch. 2 - What factors should be considered when determining...Ch. 2 - Prob. 9QCh. 2 - Prob. 10Q
Ch. 2 - Prob. 11QCh. 2 - Proper authorization is required before orders for...Ch. 2 - Prob. 13QCh. 2 - Prob. 14QCh. 2 - Prob. 15QCh. 2 - Prob. 16QCh. 2 - Prob. 17QCh. 2 - Normally, a manufacturer maintains an accounting...Ch. 2 - Prob. 19QCh. 2 - Why do companies adopt the LIFO method of...Ch. 2 - Prob. 21QCh. 2 - Prob. 22QCh. 2 - Prob. 23QCh. 2 - Prob. 24QCh. 2 - Prob. 25QCh. 2 - Prob. 26QCh. 2 - Prob. 27QCh. 2 - Prob. 28QCh. 2 - A manufacturing process may produce a considerable...Ch. 2 - After a product is inspected, some units may be...Ch. 2 - Order Point Pershing, Inc. expects daily usage of...Ch. 2 - Economic order quantity; order cost; carrying cost...Ch. 2 - Economic order quantity; order cost; carrying cost...Ch. 2 - Journalizing materials requisitions Penrose...Ch. 2 - Recording materials transactions Prepare a journal...Ch. 2 - PurrChems raw materials records contained the...Ch. 2 - Using first-in, first-out perpetual inventory...Ch. 2 - LIFO costing Using last-in, first-out perpetual...Ch. 2 - Using the weighted average method of perpetual...Ch. 2 - Prob. 10ECh. 2 - Renfro, Inc. was franchised on January 1, 2016. At...Ch. 2 - Recording materials transactions Craig Products...Ch. 2 - Recording materials transactions Broadwell...Ch. 2 - JIT and cost control Matsui Industries produces...Ch. 2 - Kenkel, Ltd. uses backflush costing to account for...Ch. 2 - For E2-15, prepare any journal entries that would...Ch. 2 - Davis Co. uses backflush costing to account for...Ch. 2 - For E2-17, prepare any journal entries that would...Ch. 2 - A machine shop manufactures a stainless steel part...Ch. 2 - Spoiled work Roger Company manufactures tennis...Ch. 2 - Defective work Herbert Electronics manufactures an...Ch. 2 - Perry Co. predicts it will use 25,000 units of...Ch. 2 - Prob. 2PCh. 2 - Economic order quantity; tabular computation Lopez...Ch. 2 - In P2-3, assume that the company desires a safety...Ch. 2 - Inventory costing methods The purchases and issues...Ch. 2 - Inventory costing methods The following...Ch. 2 - Terrills Transmissions uses a job order cost...Ch. 2 - Prob. 8PCh. 2 - Tuscany Products, Inc. uses a job order cost...Ch. 2 - Prob. 10PCh. 2 - JIT and cost control Langray, Ltd. produces 50,000...Ch. 2 - Backflush costing Russell Corp. uses backflush...Ch. 2 - Webster Company uses backflush costing to account...Ch. 2 - An examination of Buckhorn Fabricators records...Ch. 2 - One of the tennis rackets that Ace Sporting Goods...Ch. 2 - Lloyd Industries manufactures electrical equipment...Ch. 2 - Review Problem for Chapters 1 and 2 UltraLift...Ch. 2 - Financial and Nonfinancial Aspects of Changing to...Ch. 2 - Prob. 2MC
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- Lloyd Industries manufactures electrical equipment from specifications received from customers. Job X10 was for 1,000 motors to be used in a specially designed electrical complex. The followingcosts were determined for each motor: At final inspection, Lloyd discovered that 33 motors did not meet the exacting specifications established by the customer. Anexamination indicated that 18 motors were beyond repair andshould be sold as spoiled goods for 75 each. The remaining15 motors, though defective, could be reconditioned as first-qualityunits by the addition of 1,650 for materials, 1,500 for labor, and1,200 for factory overhead. Required: Prepare the journal entries to record the following: 1. The scrapping of the 18 motors, with the income from spoiledgoods treated as a reduction in the manufacturing cost of thespecific job. 2. The correction of the 15 defective motors, with the additionalcost charged to the specific job. 3. The additional cost of replacing the 18 spoiled motors with newmotors. 4. The sale of the spoiled motors for 75 each. 5. If the reconditioned motors sell for 400 each, is Lloyd betteroff reconditioning the defective motors or selling them as isfor 75 as spoiled goods?arrow_forward(c) Complete All Things Brass Work-In-Process Inventory – Polishing Process T-account, clearly showing the ending balance. (d) Prepare the journal entries for the:▪ assignment of direct materials, direct labour incurred, and the manufacturing overhead applied to the Polishing Process▪ cost of the units completed and transferred out to the Packaging Process (e) Given that 30% of the unexpected losses were because of pilferage, prepare the abnormal spoilage statement, clearly showing All Things Brass true loss associated with the Polishing Processarrow_forwardRequired: (d) Prepare the journal entries for the:- assignment of direct materials, direct labor incurred and the manufacturing overhead applied to the Polishing Process - cost of the units completed and transferred out to the Packaging Process (e) Given that 30% of the unexpected losses were as a result of pilferage, calculate Fen Furnishings true loss associated with the Polishing Process.arrow_forward
- (d) Prepare the journal entries for the:▪ assignment of direct materials, direct labour incurred, and the manufacturing overhead applied tothe Polishing Process▪ cost of the units completed and transferred out to the Packaging Process (e) Given that 30% of the unexpected losses were because of pilferage, prepare the abnormal spoilagestatement, clearly showing All Things Brass true loss associated with the Polishing Process.arrow_forwardIf the 300 defective bolts(normal spoilage) were repaired and management wanted to be sure the incremental costs did not exceed the cost of producing new units, how would the rework costs be accounted for: a. Charged to overhead and spread over the costs of all products. b. Expensed as extraordinary. c. Charged to those belts repaired. d. As normal materials, labor and overhead.arrow_forward23. Which of the following costs is relevant to a make-or-buy decision of a particular part of a product? a.The direct labor costs used to manufacture the part b.The depreciation on the plant used to manufacture the part c.The fixed annual rent paid for the office building d.The salary of the sales manager who sells the productarrow_forward
- Indicate whether each of the following costs of an automobile manufacturer would be classified as direct materials cost, direct labor cost, or factory overhead cost: Cost Classification a. Depreciation of robotic assembly line equipment b. V8 automobile engine c. Steering wheel d. Wheels e. Painting safety masks for employees working in the paint room f. Salary of test driver g. Glass used in the vehicle’s windshield h. Wages of assembly line workerarrow_forward21. All of the following methods maybe used to account for the revenue from scrap sales except: a• Credit factory overhead control, if the scrap cannot be identified with a specific job. b• Credit materials, if the scrap would have been able to be recycled c• Credit work in process, if the scrap is identified with a specific job. d• Credit scrap revenue, which is included in the other income section of the income statementarrow_forwardWhich of the following is a TRUE statement regarding the treatment of scrap by a firm? a. Scrap is always allocated to a specific job. b. Scrap is separated between normal and abnormal scrap. c. Revenue received from the sale of scrap on a job lowers the total costs for that job . d. There are costs assigned to scrap.arrow_forward
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