Question

18-36 Spoilage injob costing. Jellyfish Machine Shop is a manufacturer of motorizedcarts for vacation
resorts.
Patrick Cullin, the plantmanager of Jellyfish, obtains the following information for Job #10in August
2014. A total of 46 units werestarted, and 6 spoiled units were detected and rejected at finalinspection,
yielding 40 good units. Thespoiled units were considered to be normal spoilage. Costs assignedprior to the
inspection point are $1,100per unit. The current disposal price of the spoiled units is $235per unit. When
the spoilage is detected, thespoiled goods are inventoried at $235 per unit.
1. What is the normal spoilagerate?
2. Prepare the journal entriesto record the normal spoilage, assuming the following:
a. The spoilage is related toa specific job.
b. The spoilage is common toall jobs.
c. The spoilage isconsidered abnormal.

18-37 Rework injob costing, journal entry (continuation of 18-36). Assume that the6 spoiled units of

Jellyfish Machine Shop’s Job#10 can be reworked for a total cost of $1,800. A total cost of$6,600 associated

with these units has alreadybeen assigned to Job #10 before the rework.

Prepare the journal entriesfor the rework, assuming the following:

a. The rework is related to aspecific job.

b. The rework is common to alljobs.

c. The rework is considered to be abnormal.

18-38 Scrap attime of sale or at time of production, journal entries(continuation of 18-36). Assume that
Job #10 of Jellyfish MachineShop generates normal scrap with a total sales value of $700 (it isassumed
that the scrap returned to thestoreroom is sold quickly).
Prepare the journal entriesfor the recognition of scrap, assuming the following:
a. The value of scrap isimmaterial and scrap is recognized at the time of sale.
b. The value of scrap ismaterial, is related to a specific job, and is recognized at thetime of sale.
c. The value of scrap ismaterial, is common to all jobs, and is recognized at the time ofsale.
d. The value of scrap ismaterial, and scrap is recognized as inventory at the time ofproduction and is
recorded at its net realizablevalue.