Question 8

PVW Company manufactures products to customer specifications. A job costing system is used to accumulate production costs. During the month of September, an order (Job X2) by a customer comprised 5,000 units of the product; manufacturing cost is $5.00 per unit. The processing of this job, however, resulted in spoilage of 400 units, considered normal with no disposal value, attributable to this specific job.

Required:

1. How will you account for the above transaction, for example, in a journal entry?
2. Determine the unit cost showing computations.