Rimmer Corporation makes two different types of hubcaps for cars$-$models HM$3$ and JB$4.$ Circular pieces of metal are stamped out of steel sheets $($leaving the edges as scrap$),$ formed, and finished. The

stamping operation is identical for both types of hubcaps.

During May, Rimmer manufactured $23,000$ units of HM$3$ and $17,000$ units of JB$4.$ In May, manufacturing costs per unit of HM$3$ and JB$4$ before accounting for the scrap are as follows:

View the manufacturing costs per unit.

Materials$-$related manufacturing costs are allocated to products at $20\%$ of direct materials costs. Other manufacturing overhead is allocated to products at $200\%$ of direct manufacturing labour costs. Since

the same metal sheets are used to make both types of hubcaps, Rimmer maintains no records of the scrap generated by the individual products. Scrap generated during manufacturing is accounted for at

the time it is returned to the storeroom as an offset to materials$-$related manufacturing overhead. The value of scrap generated during May and returned to the storeroom was $$17,020.$

Required

Prepare a journal entry to summarize the accounting for scrap during

May.

Suppose the scrap generated in May was sold in June for $$17,020.$

Prepare a journal entry to account for this transaction.

What adjustments, if any, would you make for scrap when calculating

the manufacturing cost per unit for HM$3$ and JB$4$ in May? Explain.

Manufacturing Costs per Unit