(Job order costing: rework) Oehlke Rigging manufactures pulley systems to customer specifications and uses a job order system. Mary Sue Co. recently ordered 10,000 pulleys, and the job was assigned number BA468. Informa¬ tion for Job #BA468 revealed the following:

Final inspection of the pulleys revealed that 230 were defective. In correct¬ ing the defects, an additional $850 of cost was incurred ($150 for direct ma¬ terial and $700 for direct labor). After the defects were corrected, the pulleys were included with the other good units and shipped to the customer.

a. Prepare the journal entry to record incurrence of the rework costs if re¬ work is normal but specific to this job.

b. Prepare the journal entry to record incurrence of the rework costs if Oehlke Rigging’s predetermined overhead rate includes normal rework costs.

c. Prepare the journal entry to record incurrence of the rework costs, as¬ suming that all rework is abnormal.LO1.

Transcribed Image Text:

Direct material Direct labor Overhead $20,400 24,600 18,400