Sunny Corp. manufactures portable beds and chairs made of round steel bars and woven plastic strips...
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Sunny Corp. manufactures portable beds and chairs made of round steel bars and woven plastic strips (similar to woven rattan strips). The steel bars are cut, heated and bent before they are connected by bolts and nuts to form the desired structures. The woven plastic strips are subsequently attached per specifications. For 2014, estimated factory overhead (without the corresponding provision for any imperfection) is P 60,000 based on estimated direct labor cost of P 120,000. Per estimates, a 5% spoilage may be expected with unrecovered cost of P 3,000. For January, 2014, the company processed an order for 10 portable rocking chairs (job no. 027). The prime costs are as follows: P 10,000 5,000 Direct materials Direct labor Upon final inspection, two rocking chairs are found below standard. Estimated cost recovery is P 1,000 per chair. Questions: a. Assuming that the job is a regular or standard one, (1) what factory overhead rate must be used? (2) what must be the unit cost for the remaining eight rocking chairs upon completion? (3) what are the entries to take up the original production cost, spoilage and completion of the remaining units? b. Assuming that the job is a special one, what would be your answers for the questions given above? Sunny Corp. manufactures portable beds and chairs made of round steel bars and woven plastic strips (similar to woven rattan strips). The steel bars are cut, heated and bent before they are connected by bolts and nuts to form the desired structures. The woven plastic strips are subsequently attached per specifications. For 2014, estimated factory overhead (without the corresponding provision for any imperfection) is P 60,000 based on estimated direct labor cost of P 120,000. Per estimates, a 5% spoilage may be expected with unrecovered cost of P 3,000. For January, 2014, the company processed an order for 10 portable rocking chairs (job no. 027). The prime costs are as follows: P 10,000 5,000 Direct materials Direct labor Upon final inspection, two rocking chairs are found below standard. Estimated cost recovery is P 1,000 per chair. Questions: a. Assuming that the job is a regular or standard one, (1) what factory overhead rate must be used? (2) what must be the unit cost for the remaining eight rocking chairs upon completion? (3) what are the entries to take up the original production cost, spoilage and completion of the remaining units? b. Assuming that the job is a special one, what would be your answers for the questions given above?
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Answer a 1 Overhead rate P050 2 P1875 3 See journal entries in explanation b 1 Overhead rate P050 2 ... View the full answer
Related Book For
Principles of Accounting
ISBN: 978-1133626985
12th edition
Authors: Belverd E. Needles, Marian Powers and Susan V. Crosson
Posted Date:
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