Defective Goods

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Defective Goods

A job order for 30 kitchen cabinets entails the following prime costs:
Direct materials        P18,000
Direct labor               12,000
Factory overhead rate of 80% of direct labor cost includes 3% provision for
reprocessing cost of defective work.
Five of the cabinets are found to have imperfections and are reprocessed. Prime cost
incurred un reprocessing amounts to P2,000 ( direct materials - P800, and Direct labor -
P1,200).
Reprocessing Cost treated as factory overhead.

costs
Direct materials P18,000
Drect labor 12,000
factory overhead (80% x P12,000) 9,600
39,600

The entries are given below:


to take up the original cost of the job:
Work in process _ Direct materials      P18,000
Work in Process _ Dl                              12,000
Work in process - FOH                          9,600
                    Materials                                                18,000
                    payroll                                                     12,000
                    Applied Factory overhead                    9,600
to take up reprocessing cost
Factory overhead control (defective work)   2,960
     Materials                                                                     800
      Payroll                                                                        1,200
      Applied Factory overhead (80% x  1,200)              960
to take up completion of all the 30 units
Finished goods                                                39,600
      Work in process  DM                                               18,000
      Work in process DL                                                  12,000
       Work in process FOH                                              9600
Reprocessing cost charged to a Particular job

cost
Direct Materials 18,000
Direct labor 12,000
Factory overhead (77% x 12000) 9,240
39,24

to take up the original cost of the job:


Work in process _ Direct materials      P18,000
Work in Process _ Dl                              12,000
Work in process - FOH                          9,240
                    Materials                                                18,000
                    payroll                                                     12,000
                    Applied Factory overhead                    9,240
to take up reprocessing cost
Work in process - Dm                           800
Work i Process - DL                              1,200
Work in process - FOH                         924
     Materials                                                                     800
      Payroll                                                                        1,200
      Applied Factory overhead (77% x  1,200)              924
to take up completion of all the 30 units
Finished goods                                                42,164
      Work in process  DM                                               18,800
      Work in process DL                                                  13,200
       Work in process FOH                                              10,164
42,164/30 units = 1,405.47
2,924/30 = 97.47

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