Accounting for Spoilage

Charged to Specific Job (reason for the defect is due from the action taken by the customer) (FOH rate is net of Allo
Spoiled Goods Inventory @ Sales Value XXX
Work In Process XXX

Charged to all Jobs(Production) (reason for the defect is internal failure) (FOH rate is inclusive of Allowance for Sp
Spoiled Goods Inventory @ Sales Value XXX
Factory Overhead Control (Loss from spoilage = Cost - Sales Value) XXX
Work in Process XXX

Accounting for Reworks

Charged to Specific Job (reason for the defect is due from the action taken by the customer) (FOH rate is net of Allo
Work in Process XXX
Materials XXX
Payroll XXX
Factory Overhead Applied XXX
Charged to all Jobs(Production) (reason for the defect is internal failure) (FOH rate is inclusive of Allowance for Re
Factory Overhead Control XXX
Materials XXX
Payroll XXX
Factory Overhead Applied XXX

Accounting Scrap Material

a) at point of sale
1) Other Income (Scrap Sales)
2) Charged to specific job (WIP)
3) Charged to all jobs (FOHC)

Cash XXX
Scrap Sales/WIP/FOHC XXX

b) at the point of recovery

1) Charged to specific job (WIP)
2) Charged to all jobs (FOHC)

upon recovery
Scrap Materials XXX
WIP/FOHC XXX

upon sale
Cash XXX
Scrap Materials XXX

Problem 7
All Jobs Unit Cost
Incurrence of cost
Work in Process 12,400,000.00
Materials 3,600,000.00
 Payroll 4,000,000.00
Factory Overhead Control 4,800,000.00
12,400,000.00 1,240.00
To record the spoilage
Spoiled Goods Inventory 100,000.00
Factory Overhead Control 24,000.00
Work in Process 124,000.00

To record the completion of the 9,900 units

Finished Goods Inventory 12,276,000.00
Work in Process 12,276,000.00 1,240.00
ustomer) (FOH rate is net of Allowance for Spoilage)

s inclusive of Allowance for Spoilage)

ustomer) (FOH rate is net of Allowance for Rework)

30.00
5.00
10.00
15.00
s inclusive of Allowance for Rework)

RSP 150
SP as Seconds 75 75

Cost of production 100

cost of rework
M 5
L 10
OH 15
30
45
SP 75 150
Cost 100 130
-25 20

Specific Unit Cost

11,600,000.00
3,600,000.00
 4,000,000.00
4,000,000.00
11,600,000.00 1,160.00

100,000.00

100,000.00

11,500,000.00
11,500,000.00 1,161.62