2) Springfield Sign Shop manufactures only specific orders. It uses a standard cost system. During one large order for the airport authority, an unusual number of signs were spoiled. The normal spoilage rate is 10% of units started. The point of first inspection is half way through the process, the second is three-fourths through the process, and the final inspection is at the end of the process. Other information about the job is as follows:

Signs started 3,000

Signs spoiled 450

Direct materials put into process at beginning $ 60,000

Conversion costs for job $120,000

Standard direct material costs per sign $27

Standard conversion cost per sign $54

Average point of spoilage is the 3/4 completion point

Average current disposal cost per spoiled sign $15

Required:

Make necessary journal entries to record all spoilage.

The Answer: Average cost per sign when spoiled:

Direct material cost $27.00

Conversion ($54 3/4) 40.50

Total cost per spoiled sign $67.50

Abnormal spoilage = Total spoilage - normal spoilage

= 450 - 300

= 150

Materials Control (450 $15) 6,750

Loss from Abnormal Spoilage (150 $52.50) 7,875

Manufacturing Overhead Control (300 $52.50) 15,750

Work-in-Process Control, airport job (450 $67.50) 30,375

I GOT THE ANSWER BUT HOW TO GET $52.50 FOR LOSS FROM ABNORMAL SPOILAGE.