Question

5

Cost of Normal Spoilage Frieling Company installs granite countertops in customers' homes. First, the customer chooses the particular granite slab, and then Frieling measures the countertop area at the customer's home, cuts the granite to that shape, and installs it. The Tramel job calls for direct materials of $2,700 and direct labor of $1,300. Overhead is applied at the rate of 130 percent of direct labor cost. Unfortunately, one small countertop breaks during installation and Frieling must cut another piece and install it to properly complete the job. The additional rework required direct materials costing $1,200 and direct labor costing $900. Assume that the spoilage was due to carelessness by a Frieling worker and it is considered to be normal spoilage. Required: 1. Calculate the cost of the Tramel job. 1,690 X Feedback Check My Work Normal spoilage is expected due to the nature of the typical production process and the cost is included in overhead that is then applied to all good units produced. 2. Make any needed journal entry to the verhed account. an amount box does not require an entry, leave it Finished Goods Inventory x Cost of Goods Sold x 110 III Work in Process x

Answer 1

1.) Cost of the tramel job :-

Direct materials $2,700

Direct Labor $1,300

Applied Overhead ($1,300 * 130%) $1,690

Total Job Cost $5,690

2.) Cost of Re-work :-

Direct Materials $1,200

Direct Labor     $900

Applied Overhead ($900 * 130%) $1,170

Total Re-work Cost $3,270

JOURNAL ENTRY:-

Overhead Control a/c    ...Dr. $2,100

To Material Control a/c $1,200

To Payrol Control a/c     $900