Question 7.2 Total Engineering Co. makes brackets which are fitted into motor vehicles. It manufactures these brackets in batches of 400. Batch number 36 was produced and machined at the rate of 20 per hour but 50 brackets failed to pass the final inspection. Of these 20 were scrapped, and the scrap value credited to the batch cost account. The remaining brackets were considered to be rectifiable and rectification work took 10 hours.

Data for batch 36 is as follows:

£

Raw materials per bracket 2.40 Scrap value per bracket 0.80 Hourly rate of machine operators 6.80 Machine overhead rate (per running hour) 2.50 Setting up cost of machine – normal – 32.00 rectification 36.00 Calculate:

(a) the cost per unit of units actually produced;

(b) the cost of defective work.