Job costing, rework. The Bristol Corporation manufactures two brands of motors, $M-5 and RW-8. The costs of
Question:
Job costing, rework. The Bristol Corporation manufactures two brands of motors, $M-5 and RW-8. The costs of manufacturing each SM-5 motor, excluding rework costs, are direct materials, $360; direct manufacturing labour, $72; and manufacturing overhead, $228.
Defective units are sent to a separate rework area. Rework costs per $M-5 motor are direct materials, $72; direct manufacturing labour, $54; and manufacturing overhead, $90.
In February 2007, Bristol manufactured 1,000 $M-5 and 500 RW-8 motors, and 80 of the $M-5 motors required rework. Bristol classifies 50 of these motors as normal rework for
$M-5 and RW-8, and not specifically attributable to $M-5. None of the RW-8 motors required rework. Bristol allocates manufacturing overhead on the basis of machine-hours required to manufacture $M-5 and RW-8. Each $M-5 and RW-8 motor requires the same number ofmachine-hours.
Required 1. Prepare journal entries to record the accounting for rework.
2. What were the total rework costs for $M-5 motors in February 2007?
Step by Step Answer:
Cost Accounting A Managerial Emphasis
ISBN: 9780131971905
4th Canadian Edition
Authors: Charles T. Horngren, George Foster, Srikant M. Datar, Howard D. Teall