Distinguish among spoilage, rework, and scrap.

(L. Bamber) Barrett Kitchens produces a variety of items in accordance with special job orders from hospitals, plant cafeterias, and university dormitories. An order for 2,100 cases of mixed vegetables costs 9 dollars per case: direct materials, 4 dollars; direct manufacturing labor, 3 dollars; and manufacturing overhead allocated, 2 dollars. The manufacturing overhead rate includes a provision for normal spoilage. Consider each requirement independently. 1\. Assume that a laborer dropped 420 cases. Suppose part of the 420 cases could be sold to a nearby prison for 420 dollars cash. Prepare a journal entry to record this event. Calculate and explain briefly the unit cost of the remaining 1,680 cases. 2\. Refer to the original data. Tasters at the company reject 420 of the 2,100 cases. The 420 cases are disposed of for 840 dollars. Assume that this rejection rate is considered normal. Prepare a journal entry to record this event, and do the following: a. Calculate the unit cost if the rejection is attributable to exacting specifications of this particular job. b. Calculate the unit cost if the rejection is characteristic of the production process and is not attributable to this specific Job. c. Are unit costs the same in requirements 2 a and 2 b ? Explain your reasoning briefly. 3\. Refer to the original data. Tasters rejected 420 cases that had insufficient salt. The product can be placed in a vat, salt can be added, and the product can be reprocessed into jars. This operation, which is considered normal, will cost 420 dollars. Prepare a journal entry to record this event and do the following: a. Calculate the unit cost of all the cases if this additional cost was incurred because of the exacting specifications of this particular job. b. Calculate the unit cost of all the cases if this additional cost occurs regularly because of difficulty in seasoning. c. Are unit costs the same in requirements 3a and 3b? Explain your reasoning briefly.

Jellyfish Machine Shop is a manufacturer of motorized carts for vacation resorts. Patrick Cullin, the plant manager of Jellyfish, obtains the following information for Job #10 in August 2017\. A total of 46 units were started, and 6 spoiled units were detected and rejected at final inspection, yielding 40 good units. The spoiled units were considered to be normal spoilage. Costs assigned prior to the inspection point are 1,100 dollars per unit. The current disposal price of the spoiled units is 235 dollars per unit. When the spoilage is detected, the spoiled goods are inventoried at 235 dollars per unit. 1\. What is the normal spoilage rate? 2\. Prepare the journal entries to record the normal spoilage, assuming the following: a. The spoilage is related to a specific job. b. The spoilage is common to all jobs. c. The spoilage is considered to be abnormal spoilage.

In the shipping department of World Class Steaks, conversion costs are added evenly during the process, and direct materials are added at the end of the process. Spoiled units are detected upon inspection at the end of the process and are disposed of at zero net disposal value. All completed work is transferred to the next department. The transferred-in costs for May equal the total cost of good units completed and transferred out in May from the prep department, which were calculated in Problem \(18-35\) using the weighted- average method of process costing. Summary data for May follow. For the shipping department, use the weighted-average method to summarize the total costs to account for and assign those costs to units completed and transferred out (including normal spoilage), to abnormal spoilage, and to units in ending work in process.

"The unit cost of normal spoilage is the same as the unit cost of abnormal spoilage." Do you agree? Explain.

Plastique produces parts for use in various industries. Plastique uses a job- costing system. The nature of its process is such that management expects normal spoilage at a rate of \(2 \%\) of good parts. Data for last month is as follows: The spoiled parts were identified after \(100 \%\) of the direct material cost was incurred. The disposal value is 2 dollars/part. 1\. Record the journal entries if the spoilage was (a) job specific or (b) common to all jobs. 2\. Comment on the differences arising from the different treatment for these two scenarios.