Cost Flows; Application of OverheadErkens Company uses a job-costing system with normal costing and applies factory overhead on the basis of machine hours. At the beginning of the year, management estimated that the company would incur $1,980,000 of factory overhead costs and Erkens Company recorded the following events during the month of april: Particulars Qty Cost/unit Total Cost a. Purchased mterials on account 180,000 5 900,000 b. Issued materials to production Direct 105,000 5 525,000 Indirect 15,000 5 75,000 c. Incurred labor costs Direct 240,000 Indirect 40,000 d. Depreciation of Equipment 75,700 e. Insurance for the manufacturing property 3,500 f. Utilities and other misc. items 8,500 g. Completed jobs and transferred to FGI account Job H11 7,500 Job G28 77,000 h. Shipped Job G28 and invoiced at 35% above cost i. Used 7,700 machine hours during April 7,700 30 231,000 Actual overhead costs 202,700 Overhead Variance 28,300 Required 1. Compute Erkens Company's predetermined overhead rate for the year. 2. Prepare journal entries for April. 3. Compute for overhead variance and close into COGS in April 30. e basis of machine hours. factory overhead costs and use 66,000 machine hours. Answers: 1. Predetermined overhead rate: (1,980,000/66,000) 30 2. Journal Entries for April Account Title Debit Credit Materials Inventory 900,000 Accounts Payable 900,000 a. Purchased mterials on account Work-in-Process Inventory 525,000 Factory Overhead 75,000 Materials Inventory 600,000 b. Issued materials to production Work-in-Process Inventory 240,000 Factory Overhead 40,000 Accrued Payroll 280,000 c. Incurred labor costs Factory Overhead 75,700 Accumulated Depreciation 75,700 d. Depreciation of Equipment Factory Overhead 3,500 Prepaid Insurance 3,500 e. Insurance for the manufacturing property Factory Overhead 8,500 Cash 8,500 f. Utilities and other misc. items for the manufacturing plant Finished Goods Inventory - Job H11 7,500 Finished Goods Inventory - Job G28 77,000 Work-in-Process Inventory 84,500 g. Completed jobs and transferred to FGI account Accounts Receivable 103,950 Cost of Goods Sold 77,000 Sales 103,950 Finished Goods Inventory - Job G28 77,000 h. Shipped Job G28 and invoiced at 35% above cost Work-in-Process Inventory 231,000 Factory Overhead 231,000 i. Overhead allocation for April - 7700 machine hours 3. Adjust overapplied overhead Factory Overhead 28,300 Cost of Goods Sold 28,300 Adjustment of overapplied overhead for the month of April What is the total factory overhead applied durin Finished goods inventory 67.500 3.200 2. and Job B was started September 1.000 Direct materials requisitioned Answers: Job A 65.500.500/95. Direct labor hours Costs added in Sep Job A 4.September .200 Direct materials Job B 3.5 Overapplied overhead .000 1. Rental costs Total direct labor hours Factory 7. beg.500 1. Job A was completed during September.Job Costing Johnson Inc.000 3. The following information is for September of the current year. Total overhead applied in September.000 and estimted factory overhead is $617.600 Applied overhead Indirect materials used 12.500 Supervisory salaries 6.000hrs = 6.500 Work-in-process.000 2. What is the overapplied or underapplied overhe Material purchases 104.500 Direct labor Labor costs incurred Factory overhead Direct labor ($8.800 Applied overhead .000 Actual overhead Predetermined overhead rate: $617. Total cost of Job A Job B 33. estimated direct labor hours are 95. Total overhead variance Administrative offices 1. What is the total cost of Job A? Work-in-process inventory (All Job A) 31.450 Total cost of Job A Indirect labor 13.000 Multiply: overhead rate Administrative offices 1.September Total equipment depreciation costs Factory 7. Inventories Required: Materials Inventory 7.50/hour) 65. is a job-order manufacturing company that uses a predetermined overhead rate based on direct labor hours to ap For the current year. 000 159. and Job B was started but not finished.050 50.050 .200 applied in September.050 46.September 50.700 27.700 6.000 ead .based on direct labor hours to apply overhead to individual jobs.200 65. 7.300 128. eptember. l cost of Job A? l factory overhead applied during September? rapplied or underapplied overhead for September? 31.September 4.000 35.5 . 000 Direct labor hours 22. 2. As the needs of different jobs change. Barnes.Application of Overhead Whitley Construction Company is in the home remodeling business. Whitley has three teams of highly skilled employees. with summer being the period of high activity and winter the low period. some t determine job costs and to serve as a basis for bidding and pricing the jobs. some supervisory labor. What are some of the potential sustainability issues for Whitley? 5. What is the amount of underapplied or overapplied overhead? 3. Job Direct Materials Direct Labor Hours Direct Labor Cost Harrison 6. Direct materials and direct labor are easily traced construction equipment. Suppose that for the entire year. and administrative costs.654 Budgeted Data Direct materials 450. Calculate the total cost of each of the three jobs.184 Tyler 42. and how would you choose among them? .753 45 15.800 labor hours and total actual overhead was $525. What are some alternative cost drivers.000 Direct labor costs 600.229 88 22. Whitley has chosen direct labor hours as the cost-driver base for applying overhead.338 133 49.367 Barnes 13. the cost of bidding for new customers. and Tyler.000. Whitley use clients: Harrison.500 Total overhead 495. Whitley’s business is very seasonal.000 Overhead Rate 22 Required: 1. Whitley used 23. The cost data for each of the three jobs are summarized below. each is led by an experienced employee who coordinates the work done on each job. How would seasonality potentially affect the job costing at the company? 4. . but will affect revenue and probably cost of materials.110 37. 1.600 Actual overhead 525. you can use it as a basis of determining your overhead.654 Overhead 990 1. Okay. Whitley uses a job cos ct materials and direct labor are easily traced to each job.184 49.338 Direct Labor 15.229 42.367 22. so no effect on costing method. painting. Overhead Variance Applied overhead (23. Sustainability issues ead. each of whom has multiple skills involving carpentry. Job costing is consistent with matching principle. ty and winter the low 4. Intuition: no effect.000 Underapplied overhead . X Answers: 1.926 Total Cost 23. What are some 5. . Harrison Barnes Tyler Direct Materials 6.000.hree teams of highly skilled employees. and other home remodeling activitie the needs of different jobs change. Determine total cost for each job.349 94. Whitley has recently completed work fo mmarized below.800 x 22) 523.400 3. and administrative costs. Alternative cost drivers If material-intensive. Overhead consists of the purchase and ma omers.753 13.936 2. using Whitley’s cost tracking software.918 2. Whitley uses an annual overhead rate based on direct labor hours. some team members may be shifted to other teams for short periods of time. al overhead was $525. . Each team of time.other home remodeling activities. your overhead. . Whitley uses a job costing system to consists of the purchase and maintenance of y has recently completed work for three and probably cost of materials. if any.500 22.33 20. and if so. Overhead for the company consists of painting equipment.36 Direct labor dollars 750.05 20. In contrast. Does the job costing in part 1 of this question capture the difference between the two jobs in regard to the types of paint used? Do you think the costing system should capture this difference. and it insists on using the most environmentally friendly paints and material it has refused jobs where the client required a more environmentally harmful paint than PPC thought was appropriate for the a The company’s commitment to sustainability has lost PPC some jobs. trucks. and restoration of very old buildings and The company is known for the quality and reliability of its work. had to be disposed of in an environmentally appropriate way. repair and repainting existing structures.900. PPC has a variety of jobs: new construction. The Prevette job required oil-based paint and the cleanup after the job required the use of chemicals that.000 121. after use.70 Direct labor hours 33. supervisory labor. 2. supplies. the Harmon job required water-based paint and the job cleanup was very quick and simple and involved no harmful chemicals.600 38 1. and customers expect to pay a little more for those benefits. One of the company’s core values is sustainability.125 Overhead Rate 10. Determine the total cost of each job.800 24 855 42 Harmon 4. but it has also attracted a loyal and growing customer bas The company uses job costing and applies overhead on the basis of direct labor hours.000 145 158.39 Total overhead 360.Application of Overhead Progressive Painting Company (PPC) is a successful company in commercial and residential painting.366 66 Required: 1.75 PPC has just completed two jobs: Job Direct Materials Gallons of Paint Direct Labor Cost Direct Labor Hours Prevette 3. and administrative operation co The total budgeted costs for the year are shown below.000 Material Labor Gallons of paint 20. how do you think the costing system should be changed? . Budgeted Data Direct materials 2. 5 2. oyal and growing customer base. ttle more for those benefits.106. ught was appropriate for the application.0 Overhead 451. tion of very old buildings and homes.0 4.0 Direct Labor 855. ly friendly paints and materials in its work.675.5 709. .800.600. d administrative operation costs.5 6. cleanup cost must be accounted for. Prevette Harmon Direct Materials 3.0 1. Answers: 1. For discussion Yes.366. Determine total cost for each job.5 Total Cost 5. Departmental Overhead Rate Ryan Corporation manufactures auto steering systems. what would be the plantwide overhead rate? Notes: You will create an entry only for the abnormal spoilage because the cost of 2.000 Total 244.000 Management expects the firm to produce 1. The factory overhead costs estimated in these two departments follow: A B Total Variable Cost 150. Required 1.000 230.5% normal spoilage is already imputed in the budgeted/applied overhead.000 163. Also. Cost estimates for one unit of the product for the year follow: A B Direct Materials 200 Direct Labor ($12/hr) 300 180 120 Machine Hours 20 5 15 Direct Labor hours 25 15 10 This product requires 15 hours of direct labor in Department A and 10 hours in Department B.000 243.000 257. Compute the predetermined plantwide factory overhead rate. If factory overhead were applied on the basis of machine hours.Plantwide vs.000 487.000 units during the year. This abnormal spoilage will be a reduction to your WIP. . it requires 5 machine hours in Department A and 15 machine hours in Department B. 2. We create an inventory of spoiled units for the 4100 units that can still be sold at $7 each.000 80. Assume that factory overhead was applied on the basis of direct labor hours.000 Fixed Cost 94. Also. Plantwide factory overhead rate .48 2. Total 244.machine hours t A and 10 hours in Department B.direct labor Budgeted annual 487.750 f direct labor hours.000 Budgeted overhe 24. Departmental overhead Direct labor hou A Budgeted DL hou 15.35 3.200 Machine hours A Budgeted machin 5.000 bnormal spoilage will be a reduction to your WIP.000 Budgeted machine hours Departmental OH 16.000 e hours in Department B.000 Budgeted direct 15.35 Departmental OH 121.000 Budgeted overhe 19.000 Plantwide FOH r 24.48 Departmental OH 292.000 Plantwide FOH r 19. Compute the predetermined 4. what would be the plantwide overhead rate? A ause the cost of 2.000 hat can still be sold at $7 each.000 Budgeted annual 25. The factory Budgeted annual 20. Budgeted annual 487. Answers: 1. Plantwide factory overhead rate .5% normal spoilage is Variable Cost 150. Fixed Cost 94.27 . For discussion hours. 5% Required input 120.machine hours 3. Review results and costs for Job N1192-122.nalito na me.000 +RC[-2]*RC[-1] Good units 117.000 163.000 Divide by: 97. Journal entry Inventory of spoiled units #VALUE! +RC[-2]*RC[-1] This is for spoilage lang .overhead rate . Hahaha JE's Entry .000 163.000 Cost per unit 57 Required input in costs +R[-2]C*R[-1]C 3b. Normal input required to yield 117.000 +RC[-2]*RC[-1] Spoiled 5.025 57 +RC[-2]*RC[-1] Abnormal spoilage #VALUE! 57 +RC[-2]*RC[-1] spoilage in excess of normal spoilage rate o Recoverable amount 4100*7 #VALUE! Normal +R[-1]C*(3000/5000) Abnormal +R[-2]C*(2000/5000) 3a.000 +RC[-2]*RC[-1] Normal spoilage = 2.direct labor overhead rate .5% +R[14]C*0. Units Cost/unit Total Cost Units transferred out 122.000 163. Required yield 117.correct one Inventory for good units 117000*57 Inventory for spoiled units 4100*7 .000 good units. FG Inventory (normal spoilage) +R[-1]C*(3000/5000) Loss from abnormal spoilage +R[-2]C*(2000/5000) 0 . 5% .n excess of normal spoilage rate of 2. 000 78.5% normal - already imputed in the budgeted/applied overhead.000 12.000 42.000 Notes: You will create an entry only for the abnormal spoilage because the cost of 2.000 Rate per direct labor dollar 200% The company’s actual costs incurred during the year are as follows: Incurred by Jobs not given Job# Materials Labor ($) Applied OH Total T114 2.000 Employee benefits 28.000 15.000 48.000 20.000 68.000 10.000 Depreciation 15.000 34.000 Total .000 We create an inventory of spoiled units for the 4100 units that can still be 33.000 16.000 32.250 28. 62.000 T136 1. Job T114: Job # Materials Labor Overhead Total T114 31.750 76.000 18.000 33.000 36.000 Supervision 12.500 The company’s budgeted costs for the year are as follows: Budgeted overhead Variable Indirect materials 68.000 156.000 113.000 Budgeted direct labor dollars 90.000 50.000 Total 180.000 42. at the beginning of the year was a single job.000 T133 8.Application of Overhead Work in process inventory for Carston Inc. This abno 50.000 12.000 17.500 16.000 T119 24.000 .000 15.000 Total 35.000 Fixed Supervision 13.000 110.000 Indirect labor 56. 025 57 +RC[-2]*RC[-1] Abnormal spoilage #VALUE! 57 +RC[-2]*RC[- Recoverable amount 4100*7 #VALUE! Normal +R[-1]C*(3000/5000) Abnormal +R[-2]C*(2000/5000) #REF! 3a.000 Inventory of spoiled units #VALUE! - +RC[-2]*RC[-1 1.5% +R[14]C*0. Journal entry 1. Normal input required to yield 117. What was the actual factory overhead for Carston Inc.000 Required input 120.000 Units Cost/unit Total Cost Units transferred out 122.000 good units.000 34. +RC[-2]*RC[-1] Good units 117.000 T133 Divide by: 97. +RC[-2]*RC[-1] Normal spoilage = 2. Hahaha JE's Entry .000 Required input in costs +R[-2]C*R[-1]C 110. Actual factory overhead for the year Actual OH Job# Indirect materials and supplies . T114 Indirect labor 50. Job T114 was the only job completed and sold in the year.5% 8.correct one Inventory for good units 117000*57 Inventory for spoiled units 4100*7 .Required 1. +RC[-2]*RC[-1] Spoiled 5.000 This is for spoilage lang .000 T133 Depreciation 15. What amount was included in the Cost o Goods Sold account for this job? 4.000 . What was overapplied or underapplied overhead for the year? 3.000 Cost per unit 57 68. What was the amount of work-in-process inventory at the end of the year? 1.000 T119 Employee benefits 33.000 .nalito na me. for the year? 2. Direct labor Required yield 117.000 T136 3b.000 T136 3.000 . Review results and costs for Job 12. FG Inventory (normal spoilage) +R[-1]C*(3000/5000) Loss from abnormal spoilage +R[-2]C*(2000/5000) 0 . amount was included in the Cost of Applied OH 20.000 32.000 - - 1.000 - 156.000 +RC[-2]*RC[-1] +RC[-2]*RC[-1] +RC[-2]*RC[-1] +RC[-2]*RC[-1] spoilage in excess of normal spoilage rate of 2.5% +R[-1]C*(3000/5000) +R[-2]C*(2000/5000) Total 1.000 68.000 36.000 . Job Y was still in process at the end of March.000 8. This abnormal spoilage will be a reduction to your WIP.000 24.Application of Overhead The following information applies to the O’Donnell Company for March production.000 Material B 12.000 d.5% normal spoilage is already imputed in the budgeted/applied overhead.000 37. Issued direct materials and indirect materials with this summary of requisitions: Job X Job Y Total Material A 8. factory depreciation. The company closed the overapplied or underapplied overhead to the Cost of Goods Sold account at the end of .000 Material B 3.000 Indirect Materials 3.000 Indirect Materials 39.000 15. We create an inventory of spoiled units for the 4100 units that can still be sold at $7 each. Total #VALUE! Factory Overhead Rate 46 f.000 24. Purchased direct materials and indirect materials with the following summary of receiving reports: Material A 16.000 c.000 Indirect labor 28. There are only two jobs (X and Y) in produc a. and factory insurance incurred is summarized as follows: Notes: You will create an entry only for the abnormal spoilage because the cost of 2.000 Total 65. Factory labor incurred is summarized by these time tickets: Job X Job Y Total Direct labor 22.000 11.000 Total 74. Job Y used 800 machine hours. Job X was completed.000 35. Factory utilities.000 b.000 Total 31.000 Subtotal 11.100 machine hours. Job X incurred 1.000 16. Journal entry Inventory of spoiled units Job X #VALUE! Job Y 800 +RC[-2]*RC[-1] This is for spoilage lang .000 - Spoiled 5. Required yield 117.o jobs (X and Y) in production in March.5% Required input 120.correct one Inventory for good units 117000*57 Inventory for spoiled units 4100*7 .000 good units.000 Cost per unit 57 Required input in costs +R[-2]C*R[-1]C 3b. Hahaha JE's Entry . Review results and costs for Job N1192-122. 3.nalito na me.5% +R[14]C*0. Normal input required to yield 117.025 57 Abnormal spoilage #VALUE! 57 Recoverable amount Normal Abnormal 3a.000 Divide by: 97. Units Cost/unit Units transferred out 122.000 - Good units 117.000 - Normal spoilage = 2. FG Inventory (normal spoilage) +R[-1]C*(3000/5000) Loss from abnormal spoilage +R[-2]C*(2000/5000) Job Y 0 . 2. Manufacturing cost for each job. Required: 1. Calculate the amount of overapplied or underapplied overhead and state whether the Cost of Goods Sold account will be increased or decreased by the adjustment. Calculate the total manufacturing cost for Job X and Job Y for March. 1. Direct materials Direct labor Applied overhead Total Total Cost +RC[-2]*RC[-1] +RC[-2]*RC[-1] +RC[-2]*RC[-1] +RC[-2]*RC[-1] +RC[-2]*RC[-1] 4100*7 #VALUE! +R[-1]C*(3000/5000) +R[-2]C*(2000/5000) Indirect materials Indirect labor Depreciation Insurance Total Actual OH RC[-2]*RC[-1] . 500 .000 24.800 #VALUE! --> Total manufacturing cost Applied overhead 50.600 39.36.000 22.100 Underapplied overhead .000 15.900 spoilage in excess of normal spoilage rate of 2.100 Underapplied overhead is adjusted to increase cost of goods sold. 46 50.000 28. Job X Job Y 11.600 Applied OH Actual overhead 87.000 #VALUE! 36.500 1.500 87.000 2.800 #VALUE! 75.000 18.5% 1. . c.000 Total 357.500 Indirect labor 133. Factory utilities.500 Notes: You will create an entry only for the abnormal spoilage because the cost of 2. Job S had a gross margin of 24% based on manufacturing cost. d.250 99.500 45.000 100.Application of Overhead The following information is for Punta Company for July: a. and factory insurance incurred are summarized as follows: Utilities 14. Closed the overapplied or underapplied overhead to the Cost of Goods Sold account at the end of July. factory depreciation. Factory labor incurred for the two jobs and indirect labor are as follows: Job S Job T Total Direct labor 55.5% normal spoi already imputed in the budgeted/applied overhead. Job S incurred 6. This abnormal spoilage will be a reduct We create an inventory of spoiled units for the 4100 units that can still be sold at $7 each.000 47.000 35.250 146. Direct materials and indirect materials used are as follows: Job S Job T Total Material A 28.000 Subtotal 40.000 Total 233.500 71.750 Indirect Materials 211. Job T was still in process at the end of July.250 Depreciation 45.250 f. b. e.750 Material B 12.750 g.000 Insurance 18. Applied factory overhead costs to jobs at the predetermined rate of $42.000 Total 77.500 106.50 per labor hour. Shipped Job S to customers during July.175 labor hours. Job T used 4. on manufacturing cost. Review results and costs for Job N1192-122.000 35.000 +RC[-2]*RC[-1] Good units 117.000 +RC[-2]*RC[-1] Spoiled 5.nalito na me. arized as follows: Answers: 1.175 labor hours.000 Divide by: 97. Required yield 117.000 +RC[-2]*RC[-1] Normal spoilage = 2. Manufacturing cost for each job. Job S incurred 6.275 labor hours.025 57 +RC[-2]*RC[-1] Abnormal spoilage #VALUE! 57 +RC[-2]*RC[-1] Recoverable amount 4100*7 #VALUE! Normal +R[-1]C*(3000/5000) Abnormal +R[-2]C*(2000/5000) 3a. Units Cost/unit Total Cost Units transferred out 122. Hahaha JE's Entry .correct one Inventory for good units 117000*57 Inventory for spoiled units 4100*7 . Journal entry Depreciation Inventory of spoiled units #VALUE! Total Actual OH +RC[-2]*RC[-1] This is for spoilage lang .000 35.5% +R[14]C*0.000 35. count at the end of July. Normal input required to yield 117. 3.000 good units.labor hour.5% Budgeted OH rate Required input 120.000 Total Applied OH Cost per unit 57 Required input in costs +R[-2]C*R[-1]C Indirect materials Indirect labor Utilities 3b. FG Inventory (normal spoilage) +R[-1]C*(3000/5000) Loss from abnormal spoilage +R[-2]C*(2000/5000) 0 . 500 45.000 18.250 . 43 #REF! 211. Job S Job T 106.5% Applied overhead #REF! Actual overhead 421.688 262.250 Applied OH Overapplied overhead #REF! 6.000 55.938 358.000 133.000 421.438 spoilage in excess of normal spoilage rate of 2.500 181.250 45.438 332.175 4.250 40.275 Overapplied overhead is adjusted to decrease cost of goods sold.000 14. Explain the distinction between normal and abnormal spoilage. We create an inventory of spoiled units for the 4100 units that can still be sold at $7 each. and Scrap (appendix) Richport Company manufactures products that often require specification changes or modifications to meet customer needs.928. C Although the specification changes and modifications are commonplace. rework units.000 units had been started for the job. meaning that the job yi Randa noted that 900 of the first units produced were rejected due to a very unusual design defect that was corrected immedi Randa was unable to identify a pattern for the remaining 4.5% normal spoilage is already imputed in the budgeted/applied overhead.196. a. it is considered abnormal and then must be analyzed and the cause of the spoilag Randa Duncan.000 24 Total 6. . Distinguish between spoiled units. Notes: You will create an entry only for the abnormal spoilage because the cost of 2.000 units were rejected at final inspection..000 good units. b. They can be sold at a salvage value of $7 per un Although the job is completed. all of these costs are still in the Work-in-Process Inventory account (i. 2.000 57 Required 1.e. This abnormal spoilage will be a reduction to your WIP. and scrap.000 18 Direct labor 1. Rework. has been reviewing the output of Job N1192-122 that was recently com A total of 122. Prepare an analysis separating the spoiled units into normal and abnormal spoilage by first determining the normal input required to yield 117. one of Richport’s inspection managers. the predetermined overhead rate used to apply factory overhead costs to jobs includes an allowance for net spoilage cos If spoilage on a job exceeds the normal rate.000 15 Applied factory overhead 2. Thus. Prepare the appropriate journal entries to account for Job N1192-122.954. and 5. 3.100 rejected units. Review the results and costs for Job N1192-122.Spoilage. the cost of the complet Total Cost Cost/unit Direct materials 2.830. Richport has been able to establish a normal spoilag The company recognizes normal spoilage during the budgeting process and classifies it as a component of factory overhead. efect that was corrected immediately.000 good units.000 Good units 117. the cost of the completed job has not been transferred to the Finished Goods Inventory account).300 Work in process inventory 114.nalito na me.000 57 171. Consequently.000 units of Job N1192-122 follow.000 Recoverable amount 28. unt (i. d at a salvage value of $7 per unit.correct one Inventory for good units 6.780 Abnormal 102.300 Normal 153.700 256. Hahaha JE's Entry .000 57 6. Review results and costs for Job N1192-122.954.000 Inventory for spoiled units 28. ble to establish a normal spoilage rate of 2.000 3b.5% of good units produced (before spoilage).669.000 This is for spoilage lang .000 Cost per unit 57 Required input in costs 6. tions to meet customer needs. Richport employs a job costing system for its operations.5% 3. Divide by: 97. Normal input required to yield 117. zed and the cause of the spoilage must be submitted to management.520 3a.e. The total costs accumulated for all 122.840.5% Required input 120. 3.000 good units.000 Abnormal spoilage 2. 1192-122 that was recently completed. meaning that the job yielded 117. pection.700 .000 Normal spoilage = 2..000 Spoiled 5. mponent of factory overhead. n allowance for net spoilage cost for normal spoilage.000 on to your WIP. Required yield 117.700 Loss on abnormal spoilage 85.000 57 285.000 57 6.000 57 114.669. Units Cost/unit Total Cost Units transferred out 122. Journal entry Inventory of spoiled units 28. no more units were rejected for this reason. 000 .520 Work in process inventory 6.780 Loss from abnormal spoilage 102.FG Inventory (normal spoilage) 153.954. 700 256.5% Cost 171. Yo Jeni Composed of 122000 5000 117000 97.000 Less: Spoil 28.000 114.000 Total 285.300 Inventory for spoiled units FGI (normal) Loss from spoilage (abnormal) FGI (good units) WIP Inventory .50% 120000 Normal Abnormal spoilage in excess of normal spoilage rate of 2. 780 102. < Expected Good 3000 2000 < should be distributed accordingly 153.520 Inventory for spoiled units 28700 FGI (normal) 153780 Loss from spoilage (abnormal) 102520 FGI (good units) 6669000 WIP Inventory 6954000 .