Question

In: Accounting

The Savage Garden Company uses normal costing in its job-order cost system. The predetermined overhead rate...

The Savage Garden Company uses normal costing in its job-order cost system. The predetermined overhead rate is 3 times the direct labor cost. Job 70 was completed during 2019. This job was charged $4,000 for direct materials, $2,000 for direct labor, and $6,000 for allocated overhead. The job consisted of 10 units. After the job was completed, but before it was sent to Finished Goods, it was determined that 2 of these units were spoiled.

If the 2 bad units are considered to be abnormal spoilage and thrown away, how many total dollars for Job 70 would be transferred to Finished Goods (this is TOTAL dollars, not per unit).  

Group of answer choices

$12,000

$10,800

$9,600

None of these answers are correct.

Refer to question 8. Now assume that the spoilage is still considered to be abnormal, but that the 2 units are sold for $200 each instead of being thrown away. The total dollars transferred to Finished Goods for Job 70 would now be  

Group of answer choices

lower than your answer in the previous question.

the same as your answer in the previous question.

higher than your answer in the previous questions

Now assume that the 2 spoiled units are considered to be normal specific spoilage. Compute the COST PER UNIT of each good unit transferred to Finished Goods.

Group of answer choices

None of these answers are correct.

$1,080 per unit

$960 per unit

$1,200 per unit

$1,500 per unit

Refer to the previous question. The 2 spoiled units are still considered to be normal specific spoilage, but instead of throwing them away, the company sells each unit for $200. The COST PER UNIT of each good unit transferred to Finished Goods would be

Group of answer choices

larger than your answer in the previous question.

smaller than your answer in the previous question.

the same as your answer in the previous question.

Now assume that the 2 spoiled units are going to be treated as normal generic spoilage. What account would be debited to recognize the spoilage?

Group of answer choices

Overhead Allocated

Finished Goods Control

Work in Process Control

Overhead Control

Still referring to question 8 and Job 70, now the company fixes the bad units. The cost to rework the units is $50 per unit for direct materials and $100 per unit for direct labor. What account would be debited to recognize the total cost to fix (rework) the two units?

Group of answer choices

Overhead Allocated

Loss from Abnormal Rework

Work in Process Control

Finished Goods Control

Overhead Control

Refer to the previous question. What would be the total amount of the debit to recognize the total rework cost?

Group of answer choices

$300

$750

None of these answers are correct.

$900

$600

A company has no beginning Finished Goods. During the year, the company produces 10,000 units and sells 9,000 units. During the year, the company incurs a cost of $200,000 (among all of its other costs). If the company's manager wanted to maximize income during the current year, the manager would want the cost to be treated as

Group of answer choices

a product cost

a period expense

Refer to the previous question. What would be the DIFFERENCE in net operating income for the year by treating the $200,000 as a product cost vs. treating it as a period expense? Do NOT put a dollar sign in your answer.

Solutions

Expert Solution

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The Savage Garden Company
Answer 1 Amount $
Direct materials      4,000.00
Direct labor      2,000.00
Allocated overhead      6,000.00
Cost of Job 70 12,000.00
Units           10.00
Cost per unit     1,200.00
Good Units (10-2)             8.00
Transferred to Finished Goods     9,600.00
So answer is $ 9,600.
Answer 2
The same as your answer in the previous question.
Answer 3 Amount $
Direct materials      4,000.00
Direct labor      2,000.00
Allocated overhead      6,000.00
Cost of Job 70 12,000.00
Good Units (10-2)             8.00
Cost per unit     1,500.00
So answer is $ 1,500 per unit.
Answer 4
Smaller than your answer in the previous question.
Answer 5
Work in Process Control
Answer 6
Loss from Abnormal Rework
Answer 7
Answer is $ 300.
Answer 8
A product cost
Answer 9
                                      20,000.00

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