Figure 5-9 The Omega Company manufactures customized motors on a job-order basis. Job 492 is an order for 100 units. It requires the following:
After inspection, 2 units required rework which required 8 additional direct labor hours and $60 of materials.
Refer to Figure 5-9. If the rework is considered normal spoilage, what is the journal entry for overhead control?
A) no journal entry is needed
B) materials $ 60 payroll $80 Overhead control $140
C) overhead control $ 140 materials $60 Payroll $80
D) none of the above

Question

Figure 5-9 The Omega Company manufactures customized motors on a job-order basis. Job 492 is an order for 100 units. It requires the following:
 After inspection, 2 units required rework which required 8 additional direct labor hours and $60 of materials.
Refer to Figure 5-9. If the rework is considered normal spoilage, what is the journal entry for overhead control?
A) no journal entry is needed 
B) materials $ 60 payroll $80 Overhead control $140 
C) overhead control $ 140 materials $60 Payroll $80 
D) none of the above

Quizplus · Accepted Answer

If the rework is considered normal spoilage, it means the cost of rework should be included in the overhead cost and not treated as a separate cost. Therefore, the journal entry should debit the Overhead Control account for the total cost of rework ($140) and credit the Materials and Payroll accounts for their respective amounts ($60 and $80). Option C correctly reflects this accounting treatment.

Figure 5-9 the Omega Company Manufactures Customized Motors on a Job-Order