Reworked units, costs of rework. Grey Goods assembles washing machines at its Cami bridge plant. In February 2010, 60 tumbler units that cost $44 each from a new supplier were

¥ defective and had to be disposed of at zero disposal price. That new supplier is now bankrupt.

: Grey Goods was able to rework all 60 washing machines by substituting new tumbler units purchased from one of its existing suppliers. Each replacement tumbler cost $50.

REQUIRED 7 1. What alternative approaches are there to account for the materials costs of reworked units?

2. Should Grey Goods use the $44 or $50 amount as the costs of materials reworked? Explain.

3. What other costs might Grey Goods include in its analysis of the total costs of rework due 014 | to the tumbler units purchased from the (now) bankrupt supplier?

LO1