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Company is a contract manufacturer for a variety of pharmaceutical and over - the - counter products. Lynn Sanger, one of Flextrons quality control managers,
Company is a contract manufacturer for a variety of pharmaceutical and overthecounter products. Lynn Sanger, one of Flextrons quality control managers, obtains the following information for Job No M The order was completed recently, just before the close of Flextrons fiscal year. The units will be delivered early in the next accounting period. A total of units were started, and spoiled units were rejected at final inspection, yielding good units. Normal spoilage is units. Spoiled units were sold at $ per unit. Sanger indicates that all spoilage was related to this specific job.The total costs for all units of Job No M follow. The job has been completed, but the costs are yet to be transferred to Finished Goods.Company is a contract manufacturer for a variety of pharmaceutical and overthecounter products. Lynn Sanger, one of Flextrons quality control managers, obtains the following information for Job No M The order was completed recently, just before the close of Flextrons fiscal year. The units will be delivered early in the next accounting period. A total of units were started, and spoiled units were rejected at final inspection, yielding good units. Normal spoilage is units. Spoiled units were sold at $ per unit. Sanger indicates that all spoilage was related to this specific job.The total costs for all units of Job No M follow. The job has been completed, but the costs are yet to be transferred to Finished Goods.Required Calculate the unit quantities of normal and abnormal spoilage Prepare journal entries to account for Job No M including spoilage, disposal of spoiled units, and transfer of costs to the Finished Goods account Flextrons controller, Vince Chadwick, tells Marta Suarez, the management accountant responsible for Job No M the following: This was an unusual job. I think all spoiled units should be considered normal. Suarez knows that the work involved in Job No M was typical and that normal spoilage is units. She feels Chadwick made these comments because he wants to show a higher operating income for the year.a Prepare journal entries, similar to requirement to account for Job No M if all spoilage were considered normal. How will operating income be affected if all spoilage is considered normal?b What should Suarez do in response to Chadwicks comment?
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