Standard costing method, spoilage, journal entries
Response to the following problem:
Aaron, Inc., is a manufacturer of vents for water heaters. The company uses a process-costing system to account for its work-in-process inventories. When Job 512 was being processed in the machining department, a piece of sheet metal was off center in the bending machine and two vents were spoiled. Because this problem occurs periodically, it is considered normal spoilage and is consequently recorded as an overhead cost. Because this step comes first in the procedure for making the vents, the only costs incurred were $250 for direct materials. Assume the sheet metal cannot be sold, and its cost has been recorded in work-in-process inventory.
Prepare the journal entries to record the spoilage incurred.