Klink Ltd.uses a standard cost system in its manufacturing process.During a recent job, it noticed that its spoilage rate was high.Normal spoilage rate averages 6% of units started.Direct materials are added at the beginning of the process.Inspection occurs at the 80% point.Other information about the job follows:
Spoiled units have no salvage value.Required:
Make necessary journal entries to record all spoilage.
Definitions:
Rate
A measure or quantity considered in relation to another quantity or measure, often used to describe the speed, frequency, or cost of something.
Nper
A financial function that calculates the number of payment periods for an investment or loan based on constant payments and constant interest rates.
Fv
Future value; a finance function used to calculate the future value of an investment based on periodic, consistent payments and a steady interest rate.
What-If Analysis
The process of changing variables in models or scenarios to examine different outcomes.
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