Question

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 $1,900 and direct labor of $500. Overhead is applied at the rate of 140 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 $400 and direct labor costing $100. 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. 2. Make any needed journal entry to the overhead control account. 3. What if the additional rework required $200 of direct labor? What would be the effect on the cost of the Tramel job?

Answer 1

Answer 1.
Direct Material	1,900.00
Direct Labor	500.00
Overhead Applied - $500 X 140%	700.00
Total Cost of tramel Job	3,100.00

Normal Spoilage cost is included in the Overhead and then it is applied to goods units produced.
Answer 2.
Journal Entry
Date	Particulars	Dr. Amt.	Cr. Amt.
1	Overhead Control Account	500.00
	Raw Material		400.00
	Salary & Wages Payable		100.00
	(record the cost incurred due to normal spoilage)
Answer 3.
There would be no effect on the Cost of the Tramel Job