Heyer Appliances assembles di

shwashers at its plant in Tuscaloosa, Alabama. In February 2014, 60

circulation motors that cost $110 each (from a new supplier who subsequently went bankrupt) were

defective and had to be disposed of at zero net disposal value. Heyer Appliances was able t

o rework all 60

dishwashers by substituting new circulation motors purchased from one of its existing suppliers. Each

replacement motor cost $125.

Answer the following questions:

1.

What alternative approaches are there to account for the materials cost of reworked units?

2.

Should Heyer Appliances use the $110 circulation motor or the $125 motor to calculate the cost of

materials reworked? Explain.