Item 1

Required information-[The following information applies to the questions displayed below.]

Richport Company manufactures products that often require specification changes or modifications to meet customer needs. Consequently, Richport employs a job costing system for its operations.

Although the specification changes and modifications are commonplace, Richport has been able to establish a normal spoilage rate of 2.5% of total units produced (before spoilage is identified). The company recognizes normal spoilage during the budgeting process and classifies it as a component of factory overhead. Thus, the predetermined overhead rate used to apply factory overhead costs to jobs includes an allowance for net spoilage cost for normal spoilage. If spoilage on a job exceeds the normal rate, it is considered abnormal and must be analyzed. The cause of the spoilage must then be submitted to management.

Randa Duncan, one of Richports inspection managers, has been reviewing the output of Job N1192-122 that was recently completed. A total of 149,400 units had been started for the job, and 9,000 units were rejected at final inspection, meaning that the job yielded 140,400 good units.

Randa noted that 900 of the first units produced were rejected due to a very unusual design defect that was corrected immediately; no more units were rejected for this reason.

Randa was unable to identify a pattern for the remaining 8,100 rejected units. They can be sold at a salvage value of $9 per unit.

The total costs accumulated for all 149,400 units of Job N1192-122 follow. Although the job is completed, all of these costs are still in the Work-in-Process Inventory account (i.e., the cost of the completed job has not been transferred to the Finished Goods Inventory account).

Direct materials	$ 2,298,000
Direct labor	1,867,000
Applied factory overhead	4,350,800
Total cost of job	$ 8,515,800

Required:

1. Explain the distinction between normal and abnormal spoilage.

2. Distinguish among spoiled units, rework units, and scrap.

Item 2

Work-in-Process Inventory for Carston Incorporated at the beginning of the year was a single job,

Job T114:

Job #	Direct Materials			Direct Labor			Overhead			Total
T114	$	40,000		$	20,500		$	33,000		$	93,500

The companys budgeted costs for the year are as follows:

Budgeted overhead
Variable
Indirect materials	$ 76,500
Indirect labor	64,500
Employee benefits	32,250
Fixed
Supervision	17,250
Depreciation	19,250
Total	$ 209,750
Budgeted direct labor dollars	$ 104,875
Rate per direct labor dollar	200%

The companys actual costs incurred during the year are as follows:

Job #	Incurred by Jobs			Total
	Materials	Labor	Other
T114	$ 3,700	$ 11,700	$ -	$ 15,400
T119	25,700	21,400	-	47,100
T133	9,700	38,250	-	47,950
T136	2,700	18,550	-	21,250
	$ 41,800	$ 89,900		$ 131,700

Overhead	Incurred by Jobs			Total
	Materials	Labor	Other
Indirect materials and supplies	$ 66,800	-	-	$ 66,800
Indirect labor	-	56,800	-	56,800
Employee benefits	-	-	38,950	38,950
Depreciation	-	-	19,250	19,250
Supervision	-	14,550	-	14,550
Total	$ 66,800	$ 71,350	$ 58,200	$ 196,350

Required:

1. What was the actual factory overhead for Carston Incorporated for the year?

2. What was overapplied or underapplied overhead for the year?

3. Job T114 was the only job completed and sold in the year. What amount was included in the Cost of Goods Sold account for this job?

4. What was the amount of Work-in-Process Inventory at the end of the year?

Item 3

Brian Canning Company, which sells canned corn, uses an operation costing system. Cans of corn are classified as either sweet or regular, depending on the type of corn used. Both types of corn go through the separating and cleaning operations, but only regular corn goes through the creaming operation. During January, two batches of corn were canned from start to finish. Batch X consisted of 1,100 pounds of sweet corn, and Batch Y consisted of 1,000 pounds of regular corn. The company had no beginning or ending Work-in-Process Inventory. The following cost information is for the month of January:

	Batch	Cost		Batch Size
Raw sweet corn	X	$ 7,480		1,100	pounds
Raw regular corn	Y	3,800	*	1,000	pounds
Separating department costs		2,730
Cleaning department costs		1,890
Creaming department costs		900

*Includes $900 for cream.

Required:

1. Compute the unit cost for sweet corn and regular corn.

2. Record appropriate journal entries.

\begin{tabular}{|c|l|l|} \hline & & \\ \hline 1. & Total actual overhead & \\ \hline 2. & & \\ \hline 3. & Cost of goods sold for job T114 & \\ \hline 4. & Work-in-process inventory & \\ \hline \end{tabular} Complete this question by entering your answers in the tabs below. Compute the unit cost for sweet corn and regular corn. (Round your intermediate calculations and final answers to 2 decimal places.) Journal entry worksheet 7 To record the requisition of the raw corn for both types less the cream cost. Note: Enter debits before credits. Journal entry worksheet 7 To apply conversion costs to the Separation Department. Note: Enter debits before credits. Journal entry worksheet 7 To transfer both types of corn to the Cleaning Department. Note: Enter debits before credits. Journal entry worksheet