Sobia instrument company manufactures for stock a number of precision instruments which must meet strict specifications. During the last month an orde The r for 10,000 instruments was received and executed. Cost incurred were:

Direct materials Rs. 65,000

Direct Labour Rs. 45,000

FOH at applied rate 50% of direct Labour cost

An examination of the finished instruments indicated that 1000 instruments were defective and had to be reworked. The additional costs of rework were: -

Direct materials Rs. 1,400

Direct Labour Rs. 900

FOH at applied rate

Required: Prepare the Journal entries of the following conditions:

1. When reworking cost are charged directly to the job.

2. When additional cost incurred in reworking are charged to entire production

Set up entries in two parallel columns for the followings: -

a. To record the cost of manufacturing the original order

b. To record the additional costs for correcting the defective work

c. To record the completion of the work

d. To record the shipment of the order to the customer for Rs.160,000