ULS Housing, Inc. manufactures tiles for housing companies. During the current period, an order for 2,000 tiles was begun on job number 7876 for Camilla Homes. Jobs are marked up 150% of cost. Total costs charged to job 7876 

are:

 

Materials P 184,000

Labor (6,000 hours x 12 hour) 72,000

Factory Overhead (P24 per DL hour) 144,000

P 400,000

On inspection, 200 units were found to be defective. Materials costing P4 and 30 minutes are required to correct each defective unit. Factory overhead is charged to production on the basis of direct labor hours.

Required:

1. Assuming the defect is the result of internal failure and therefore to be charged to FOH:
2. Entries to record the total cost of job 7876, the rework cost, and the transfer of goods to inventory account.
3. Determine the unit cost.

1. Assuming the defect is the result of a change in specifications by customers.
2. Entries to record the total cost of job 7876, the rework cost, and the transfer of goods to inventory account.
3. Determine the unit cost for each unit manufactured.

Answer rating: 100% (QA)

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