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S2A Q2 - 900 – unusual design defect 1,100 – unable to...

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Question 2 (Team 2) DIANE POH YU WEI HO HUIJUAN BRENDA NEO SHU YI TAN HENG YEN PAMELA
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Key information Normal spoilage rate of 2.5% Total units of 122,000 units had been started for the job 5,000 units were rejected at final inspection Job yielded 117,000 good units 900 of the first units produced were rejected due to a very unusual design defect Unable to identify a pattern for the remaining 4,100 rejected units Remaining 4,100 units sold at a salvage value of $7 per unit
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Part a Prepare an analysis separating the spoiled units into normal and abnormal spoilage Normal input to yield 117,000 good units = (117,000 ÷ 97.5) × 100 = 120,000 Specific normal spoilage = 120,000 × 2.5% = 3,000 Abnormal spoilage = 5,000 − 3,000 = 2,000
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Unformatted text preview: 900 – unusual design defect 1,100 – unable to identify pattern Part B Prepare the appropriate journal entries to account for Job NKULT. Inventory of spoiled units for sale [$7×1,100] $7,700 Loss from abnormal spoilage $55,000 WIP [($6,954,000÷122,000)×1,100] $62,700 Loss from abnormal spoilage $51,300 WIP [($6,954,000÷122,000)×900] $51,300 Inventory of spoiled units for sale [$7×1,100] $7,700 Loss from abnormal spoilage $106,300 WIP [($6,954,000÷122,000)×2,000] $114,000 Part B Prepare the appropriate journal entries to account for Job NKULT. Inventory of spoiled units for sale [$7×3,000] $21,000 WIP $21,000 Finished goods inventory $6,819,000 WIP [$6,954,000−$114,000−$21,000] $6,819,000...
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