Question

Cost of Normal Spoilage

Answer 1

Answer:

See below

Explanation:

1. Cost of the Tramel Job

= Direct material cost + Direct labor cost + Overhead applied

= $1,900 + $500 + (140% × $500)

= $1,900 + $500 + $700

= $3,100

2. Journal entry to record the overhead cost

Overhead cost account Dr $500

To Material account Cr $400

To Labor account Cr $100

3. Effect of additional rework required $200 of direct labor on the cost of Tramel job

= Direct material cost + Direct labor cost + Overhead applied

= $1,900 + ($500 + $200) + (140% × $500)

= $1,900 + $700 + $700

= $3,300

The effect of additional rework required of $200 of direct labor cost is an increase of $200 on the cost of job for Tramel