Jackson’s Sporting Goods Store sells a variety of sporting goods and clothing. In a back room, Jackson’s has set up heat-transfer equipment to personalize T-shirts for Little League teams. Typically, each team has the name of the individual player put on the back of the T-shirt. Last week, Taffy Barnhart, coach of the Stingers, brought ina l ist of names for her team. Her team consisted of 12 players with the following names: Freda, Cara, Katie, Tara, Heather, Sarah, Kim, Jennifer, Mary Beth, Elizabeth, Kyle, and Wendy. Taffy was quoted a price of $0.50 per letter.

Chip Russell, Jackson’s newest employee, was assigned to Taffy’s job. He selected the appropriate letters, arranged the letters in each name carefully on a shirt, and heatpressed them on. When Taffy returned, she was appalled to see that the names were on the front of the shirts. Jim Jackson, owner of the sporting goods store, assured Taffy that the letters could easily be removed by applying more heat and lifting them off. This process ruins the old letters, so new letters must then be placed correctly on the shirt backs.

He promised to correct the job immediately and have it ready in an hour and a half.

Costs for heat-transferring are as follows:LO1

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Letters (each) $0.15 Direct labor (per hour) 8.00 Overhead (per direct 4.00 labor hour) Taffy's job originally took one hour of direct labor time. The removal process goes more quickly and should take only 15 minutes. Required: 1. What was the original cost of Taffy's job? 2. What is the cost of rework on Taffy's job? How should the rework cost be treated? 3. How much did Jim Jackson charge Taffy?