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Cornerstones of Cost Accounting 1st Edition by Don Hansen,Maryanne Mowen
Edition 1ISBN: 978-0538736787Cornerstones of Cost Accounting 1st Edition by Don Hansen,Maryanne Mowen
Edition 1ISBN: 978-0538736787 Exercise 29
COST OF NORMAL SPOILAGE
Bastera Company installs granite countertops in customers' homes. First, the customer chooses the particular granite slab, then Bastera measures the countertop area at the customer's home, cuts the granite to that shape, and installs it. The Gavin job calls for direct materials of $2,300 and direct labor of $400. Overhead is applied at the rate of 120 percent of direct labor cost. Unfortunately, one small countertop breaks during installation and Bastera must cut another piece and install it to properly complete the job. The additional rework required direct materials costing $400 and direct labor costing $100. Assume that the spoilage was due to carelessness by a Bastera worker and it is considered to be normal spoilage.
Required:
1. Calculate the cost of the Gavin job.
2. Make any needed journal entry to the overhead control account.
3. What if the additional rework required $200 of direct labor? What would be the affect on the cost of the Gavin job?
Bastera Company installs granite countertops in customers' homes. First, the customer chooses the particular granite slab, then Bastera measures the countertop area at the customer's home, cuts the granite to that shape, and installs it. The Gavin job calls for direct materials of $2,300 and direct labor of $400. Overhead is applied at the rate of 120 percent of direct labor cost. Unfortunately, one small countertop breaks during installation and Bastera must cut another piece and install it to properly complete the job. The additional rework required direct materials costing $400 and direct labor costing $100. Assume that the spoilage was due to carelessness by a Bastera worker and it is considered to be normal spoilage.
Required:
1. Calculate the cost of the Gavin job.
2. Make any needed journal entry to the overhead control account.
3. What if the additional rework required $200 of direct labor? What would be the affect on the cost of the Gavin job?
Explanation
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We are given the cost related to a Job b...
Cornerstones of Cost Accounting 1st Edition by Don Hansen,Maryanne Mowen
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