A Company Manufactures Leather Jackets

Question 123
Essay

A company manufactures leather jackets.Because of strict production specifications, the manufacturing department often has spoiled items.If the spoiled items are under 5 percent of a job's total items they are treated as normal spoilage.During February job #301 for 200 jackets had 8 spoiled items.The spoiled items were detected immediately before they were packaged.They had already passed the safety inspection.The marketing manager believes the items can be sold for $150 each.They had a cost at point of detection of $500 each.These costs included $250 for direct manufacturing labour, $200 for direct materials, and $50 for factory overhead.Required: a.Make the necessary journal entry, or entries, to record the spoiled units if the spoilage is normal and assigned to an overhead control account. b.Make the necessary journal entry, or entries, to record the spoiled units if the spoilage is assigned to job #301.