Use the Information Below to Answer the Following Question(s)

question 91

Multiple Choice

Use the information below to answer the following question(s) .Cartwright Custom Carpentry manufactures chairs in its Processing Department, and uses the FIFO cost flow assumption.Direct Materials are included at the inception of the production cycle and must be bundled in single kits for each unit.Conversion costs are incurred evenly throughout the production cycle.Inspection takes place at the end of the process, and spoiled units generally constitute 3 percent of the good output.Information provided for March is as follows:

-Boss Cycle generally has spoiled goods during each job.Costs are assigned to normal spoilage at $10.00 per unit and abnormal spoilage at $20.00 per unit.Disposal fees typically run $5.00 per item.Boss Cycle has a policy never to rework spoiled units.Management believes that once a unit is damaged it cannot be reworked into a quality product.The losses are charged back to the specific job.What is the appropriate journal entry if 300 units are considered abnormal spoilage and are not disposed of in a process costing system?

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Definitions:

Privity of Contract

Privity of contract is a legal principle that only those parties who have entered into a contract have the right to sue to enforce their rights or claim damages under that contract.

Statute of Frauds

A legal principle requiring certain types of contracts to be written and signed to be legally enforceable, such as those involving real estate or contracts that cannot be performed within a year.

Public Policy

Guidelines and principles that reflect the societal norms and beliefs influencing laws and government actions.

UCC

The Uniform Commercial Code encompasses a detailed framework of laws managing commercial interactions across the United States.