Valdez Plastics Company uses a job order cost system to account for its production costs. During the current period, 1,000 chairs were molded and assembled as Job 9823. The total cost incurred on the job is:
Materials ....................................................... $12,000
Labor (500 hours x $10 per hour) ........................... 5,000
Factory overhead ($20 per labor hour) ..................... 10,000
Total cost charged to Job 9823 .............................. $27,000
Before being transferred to Finished Goods Inventory, the chairs were inspected and 100 were found to be spoiled. The spoiled chairs cannot be reworked because the defects are embedded in the plastic; however, they can be salvaged for $10 each. The company maintains a separate Spoiled Goods Inventory for defective products and charges the unrecoverable cost of spoilage to Factory Overhead Control.
Required:
Determine the costs of Job 9823 to be transferred to Finished Goods Inventory and to Spoiled Goods Inventory, and give the general journal entry to record the spoilage and the transfers.