Accounting for defective units that are not reworked Wheatherbee Electronics makes cathode ray tubes (CRTs) for use in electronic testing and calibrations applications. All tubes are built to rigid specifications. Tubes not passing inspection run a high risk of failure and are discarded with no salvage value.

Most of Wheatherbee's business is special order designed to meet the changing technical needs of its growing number of customers. A recent order for 500 units was produced for a manufacturer of computers. The tubes are sold for $195 each. The cost data for Job No. CRT9742 are as follows:

The cathode ray tubes were inspected at the end of production, and 25 tubes were unaccept- able. Since most jobs are somewhat unique at Wheatherbee, management's policy is to assign defective unit production costs to the job.

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Direct materials Direct labor Manufacturing overhead Total cost $32,500 15,000 25,000 $72,500