Question

CA Inc. that produces electronic appliances get an order for 2.000 units washing machines. Cost for processing a unit is Rp.100.000. Direct materials, Rp.50.000/unit, Direct Labor, Rp.30.000/unit, and MOH, Rp20.000/unit. The Rp20.000/unit of MOH cost rate includes a provision for normal spoilage (if considere all job).

1. There are 50 units abnormal spoilage. The 50 units worth Rp.250.000. Prepare a journal entry to record this. What is the unit cost for the remaining 1.950 good units? 2. Prepare the journal entry to record the normal spoilage. Calculate the unit cost if the 50 units spoilage is normal and not attributable to this specific job. 3. Prepare the journal entry to record the normal spoilage. Calculate the unit cost if the spoilage is normal and specific to this specific job

Answer 1

1. Journal entry for Abnormal Spoilege of 50 units

Abnorma Loss A/c Dr.$5000

To Process A/c $5000

( abnormal loss recorded )

Cost Ledger Control A/c Dr.$250

To Abnormal Loss A/c $250

Costing Profit & Loss A/c Dr.$4750

To Abnormal Loss A/c $4750

( Abnormal loss transferred to Costing Profit & Loss account)

Total Cost of Remaining 1950 units is $195,000 (1950 units× $100 per unit)

2.Journal Entry for Normal Spoilage:-

Normal Loss A/c Dr.$5000

To Process A/c $5000

​​​​​​ ( Normal loss occurred )

Costing Profit & Loss A/c Dr.$5000

To Normal LossA/c $5000

( Normal loss not attributed to production cost)

3.Calculation of Unit cost if the spoilage is normal and specific to specific job:-

Total Production cost (2000 units×$100 per unit) $200000

Normal loss 50 units

Cost per unit = $200000/1950units

=$102.56 per unit. ( Approx)