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Exro Technologies Corp. (Exro) is an upstart Canadian company that specializes in the manufacture of electric motors and batteries for electric bikes. Exro uses
Exro Technologies Corp. (Exro) is an upstart Canadian company that specializes in the manufacture of electric motors and batteries for electric bikes. Exro uses a job costing system and during September incurred the following costs on a job to manufacture 1000 of their Coil Driver electric motors (note that manufacturing overhead is allocated on the basis of 150% of direct labour): Original Costs: Direct materials Direct labour Manufacturing overhead allocated Total cost of job 72,000 73,000 109,500 $ 254,500 As part of Exro's internal quality inspection process 50 motors of the 1,000 motor order were set aside because they didn't meet specification and had to be reworked. The direct costs of reworking the 50 motors to meet specification Direct materials Direct labour Total direct costs Required: 9,500 15,500 $ 25,000 Answer the following 6 questions: a. Calculate the cost per finished motor for the job, assuming the rework is attributable specifically to this job. b. Calculate the cost per finished motor for the job, assuming the rework is common to all jobs. c. Calculate the cost per finished motor for the job, assuming the 50 motors cannot be reworked and the spoilage is deemed to be due to the specifications of this job. Historically the company gets $60 per spoiled motor when they are disposed of. d. Calculate the cost per finished motor for the job, assuming the 50 motors cannot be reworked and the spoilage is considered to a result of Exro's production process in general as opposed to specific to the job. Historically the company gets $60 per spoiled motor when they are disposed of.
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