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ABC manufactures lifting equipment. One order from DEF Company for 3,000 lifting equipment showed the following cost per unit: materials, P35; labor, P20; FOH applied at P18 which includes P3 allowance for reworking defective units. Final inspection showed that 200 units are not properly produced. Correction for each defective units requires P7.50 for materials, P6 for labor ad FOH at the appropriate rate. The company billed the customer at a markup on the cost of 80%.
Problem 1: If defective are common to the job, how much is the amount billed to customers?
Problem 2: Assuming the defectives are the result of the customer's change in specification, how much is the cost per completed unit?
Problem 3: If there are abnormal production shrinkage and spoilage due to internal failure, both are included in Factory Overhead account? or just the spoilage
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