Question
ABC Bakery makes birthday cakes. The total cost to make a cake is $30, which includes $15 of materials. $10 of labor and $5 of
ABC Bakery makes birthday cakes. The total cost to make a cake is $30, which includes $15 of materials. $10 of labor and $5 of overhead. During the month of March, ABC made 150 cakes. ABC found 10 cakes to be defective. ABC allocates normal spoilage cost to all jobs. The normal spoilage rate is 5%. The defective cakes are sold for $7 each. Which of the following options is correct? A. WIP will be debited for $300 B. Loss due to Abnormal Spoilage will be debited for $150 C. Materials will be credited for $70 D. Manufacturing overhead control will be debited for $161
What would be the correct entry if ABC assigns the cost of spoilage to the specific job? A. Dr Cash $70 Dr loss due to abnormal spoilage $69 Cr Work-in-Process $139 B. Dr Materials $70 Cr. Work in Process $70 C. Dr Manufacturing overhead control $210
Dr loss due to Abnormal Spoilage $90 Cr Work-In-Process $300 D. Dr Cash $70 Dr Work-In-Process $115 Dr Loss due to Abnormal Spoilage $115 Cr Manufacturing Overhead Control $300
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