NewResolutions (NR) Corporation is a manufacturer of computer chips based in Regina. It manufactures two types of computerchips, CS1 and CS2. The costs of manufacturing each CS1chip, excluding reworkcosts, are directmaterials, $60; direct manufacturinglabour, $15; and manufacturingoverhead, $48. Defective units are sent to a separate rework area. Rework costs per CS1 chip are directmaterials, $18; direct manufacturinglabour, $11; and manufacturingoverhead, $15.

Prepare journal entries to record the accounting for the cost of the spoiled chips and for rework.

Begin by journalizing the costs assigned to the spoiled units before considering the rework costs.