francona inc manufactures electrical equipment from specifications received from cus 492445

Spoiled goods and defective work

Francona Inc. manufactures electrical equipment from specifications received from customers. Job X10 was for 1,000 motors to be used in a specially designed electrical complex. The following costs were determined for each motor:

At final inspection, Francona discovered that 33 motors did not meet the exacting specifications established by the customer. An examination indicated that 15 motors were beyond repair and should be sold as spoiled goods for $75 each. The remaining 18 motors, although defective, could be reconditioned as first-quality units by the addition of $1,650 for materials, $1,500 for labor, and $1,200 for factory overhead.

Required:

Prepare the journal entries to record the following:

1. The scrapping of the 15 units, with the income from spoiled goods treated as a reduction in the manufacturing cost of the specific job.

2. The correction of the 18 defective units, with the additional cost charged to the specific job.

3. The additional cost of replacing the 15 spoiled motors with new motors.

4. The sale of the spoiled motors for $75 each.