- Fayetteville Company is a contract manufacturer for a variety of pharmaceutical and over-the-counter products. It has a reputation for operational excellence and boasts a normal spoilage rate of 3% of normal input. Normal spoilage is recognized during the budgeting process and is classified as a component of manufacturing overhead when determining the overhead rate. Lynn Sanger, one of Fayetteville's quality control managers, obtains the following information for Job No. M102, an order from a consumer products company. The order was completed recently, just before the close of Fayetteville's fiscal year. The units will be delivered early in the next accounting period. A total of 125,510 units were started, and 6,200 spoiled units were rejected at final inspection, yielding 119,310 good units. Spoiled units were sold at $4 per urf E: (Click the icon to view the additional information.) Required Required Additional information 1. Calculate the unit quantities of normal and abnormal spoilage. 2. Require Prepare the journal entries to account for Job No. M102, including spoilage, disposal of spoiled units, and transfer of costs to the Finished Goods The total costs for all 125,510 units of Job No. M102 follow. account. The job has been completed, but the costs are yet to be Normal transferred to Finished Goods 3. Fayetteville's controller, Vince Chadwick, tells Marta Suarez, the management accountant responsible for Job No. M102, the following: "This Abnorm Direct materials $ 990,000 was an unusual job. I think all 6,000 spoiled units should be considered normal." Suarez knows that the work involved in Job No. M102 was not Direct manufacturing labour 825,000 Total un uncommon and that Fayetteville's normal spoilage rate of 3% is the 1,322,750 Manufacturing overhead appropriate benchmark. She feels Chadwick made these comments because he wants to show a higher operating income for the year. $ 3,137,750 Total manufacturing costs Prepare journal entries, similar to requirement 2, to account for Job No. M102 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 Chadwick's comment? Print Done a. Print Done - Fayetteville Company is a contract manufacturer for a variety of pharmaceutical and over-the-counter products. It has a reputation for operational excellence and boasts a normal spoilage rate of 3% of normal input. Normal spoilage is recognized during the budgeting process and is classified as a component of manufacturing overhead when determining the overhead rate. Lynn Sanger, one of Fayetteville's quality control managers, obtains the following information for Job No. M102, an order from a consumer products company. The order was completed recently, just before the close of Fayetteville's fiscal year. The units will be delivered early in the next accounting period. A total of 125,510 units were started, and 6,200 spoiled units were rejected at final inspection, yielding 119,310 good units. Spoiled units were sold at $4 per urf E: (Click the icon to view the additional information.) Required Required Additional information 1. Calculate the unit quantities of normal and abnormal spoilage. 2. Require Prepare the journal entries to account for Job No. M102, including spoilage, disposal of spoiled units, and transfer of costs to the Finished Goods The total costs for all 125,510 units of Job No. M102 follow. account. The job has been completed, but the costs are yet to be Normal transferred to Finished Goods 3. Fayetteville's controller, Vince Chadwick, tells Marta Suarez, the management accountant responsible for Job No. M102, the following: "This Abnorm Direct materials $ 990,000 was an unusual job. I think all 6,000 spoiled units should be considered normal." Suarez knows that the work involved in Job No. M102 was not Direct manufacturing labour 825,000 Total un uncommon and that Fayetteville's normal spoilage rate of 3% is the 1,322,750 Manufacturing overhead appropriate benchmark. She feels Chadwick made these comments because he wants to show a higher operating income for the year. $ 3,137,750 Total manufacturing costs Prepare journal entries, similar to requirement 2, to account for Job No. M102 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 Chadwick's comment? Print Done a. Print Done