Defective units that are reworked Weddle Brothers, Inc. makes fine hardwood furniture in a family owned manufacturing business. The company cuts, saws, and finishes much of its own hardwood used in making the furniture from its own stands of hardwood timber. It manufactures its furniture in job lots to take advantage of specific types of wood availability.

Job No. 8812 was just finished. The output was 25 large dining room tables made of heavy white oak. The table sell for $800 each to fine furniture stores in the region. Unfortunately, some of the lacquer used in finishing the tables was faulty and 5 of the tables have a gummy finish that clearly would not satisfy company quality control requirements. The cost of the job are shown below.

Management can sell the faulty units for $275 to a furniture dealer who specializes in seconds. Another alternative is to rework the 5 bad units. This would require disassembling the units, stripping the finish off, resanding and buffing all parts, and starting the finishing and curing process all over. Management decides to rework the tables and estimates that the total cost of refinishing the five units will be:

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Job No. 8812: Product: massive white oak tables Quantity: 25 Costs: Direct materials Direct labor Overhead Total cost Total Unit $ 5,400 $216 4,200 168 2,100 84 $11,700 $468