Question
Fairchild Kitchens produces a variety of items in accordance with special job orders from hospitals, plant cafeterias, and university dormitories. An order for 2,200 cases
Fairchild
Kitchens produces a variety of items in accordance with special job orders from hospitals, plant cafeterias, and university dormitories. An order for
2,200
cases of mixed vegetables costs
$9
per case: direct materials,
$4;
direct manufacturing labor,
$3;
and manufacturing overhead allocated,
$2.
The manufacturing overhead rate includes a provision for normal spoilage. Consider each requirement independently.Read the requirements
LOADING...
.
Requirement 1. Assume that a laborer dropped
440
cases. Suppose part of the
440
cases could be sold to a nearby prison for
$440
cash. Prepare a journal entry to record this event. Calculate and explain briefly the unit cost of the remaining
1,760
cases.
Prepare a journal entry to record this event. (Abbreviations used: Mfg. = Manufacturing, Pay. = Payable. Record debits first, then credits. Exclude explanations from any journal entries.)
1. | Assume that a laborer dropped 440 cases. Suppose part of the440 cases could be sold to a nearby prison for$440 cash. Prepare a journal entry to record this event. Calculate and explain briefly the unit cost of the remaining1,760 cases. | |
2. | Refer to the original data. Tasters at the company reject 440 of the2,200 cases. The440 cases are disposed of for$880. Assume that this rejection rate is considered normal. | |
a. | Prepare a journal entry to record this event, and calculate the unit cost if the rejection is attributable to exacting specifications of this particular job. | |
b. | Prepare a journal entry to record this event, and calculate the unit cost if the rejection is characteristic of the production process and is not attributable to this specific job. | |
c. | Are unit costs the same in requirements 2a and 2b? Explain your reasoning briefly. | |
3. | Refer to the original data. Tasters rejected 440 cases that had insufficient salt. The product can be placed in a vat, salt can be added, and the product can be reprocessed into jars. This operation, which is considered normal, will cost$440. | |
a. | Prepare a journal entry to record this event, and calculate the unit cost of all the cases if this additional cost was incurred because of the exacting specifications of this particular job. | |
b. | Prepare a journal entry to record this event, and calculate the unit cost of all the cases if this additional cost occurs regularly because of difficulty in seasoning. | |
c. | Are unit costs the same in requirements 3a and 3b? Explain your reasoning briefly. |
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