Figure 5-9 Alpha Company manufactures customized motors on a job-order basis.Job 492 is an order for 100 units.It requires the following:
Direct materials $3,000
Direct labor ($10/hr) 1,000
Overhead (150% DL$) 1,500
After inspection, 2 units required rework which required 8 additional direct labor hours and $60 of materials.
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Refer to Figure 5-9.If the rework is considered abnormal spoilage, what is the cost of job 492?

Question

Quizplus · Accepted Answer

The cost of the rework is considered an abnormal loss and is not included in the cost of the job. The cost of job 492 is $5,500 (direct materials $3,000 + direct labor $1,000 + overhead $1,500).

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