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Ram furniture's produces chairs and tables in accordance with job orders from customers. Given below are the details of a recent order.
Number of chairs in the job order 70 Unit cost per chair (Breakup given below) $95.00 DM cost $40.00 DL cost $35.00 Manufacturing overhead cost $20.00
The manufacturing overhead cost per chair (given above) includes a provision for normal spoilage. 6 chairs were found to be below acceptable quality and sold to a scrap dealer for $12 per chair
Problem 1: Prepare the appropriate journal entries for spoilage for the three independent cases given below. Also calculate the average cost of one good unit of chair in the job order for each of the three cases.
a) The rejection due to unacceptable quality is considered as abnormal spoilage b) The rejection is considered normal and the rejection is attributable to the exacting specifications of this jobc) The rejection is considered normal and the rejection is not attributable to this job and is a characteristic of the production process
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