Some units of output failed to pass final inspection at the end of the manufactu
ID: 2645924 • Letter: S
Question
Some units of output failed to pass final inspection at the end of the manufacturing process. The production and inspection supervisors determined that the estimated incremental revenue from reworking the units exceeded the cost of rework. The rework of the defective units was authorized, and the following costs were incurred in reworking the units.
Materials requisitioned from stores:
Direct materials $ 5,000
Miscellaneous supplies 300
Direct labor 14,000
The manufacturing overhead budget includes an allowance for rework. The predetermined manufacturing overhead rate is 150% as large as direct labor. The account(s) to be charged and the appropriate charges for the rework costs would be
work-in-process inventory control for $19,000.
work-in-process inventory control for $5,000 and factory overhead control for $35,300.
overhead control for $19,300.
overhead control for $40,300.
Explanation / Answer
The account(s) to be charged and the appropriate charges for the rework costs would be
Materials requisitioned from stores:
Direct materials $ 5,000
Miscellaneous supplies 300
Direct labor 14,000
Manufacturing Overhead 150%*14000 = $ 21000
Overhead control = $ 40,300
Answer
D) Overhead control for $40,300.
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