Everett Electronics Inc. manufactures gauges and instruments for aircraft. During the current year, an order for 1,000 units of a custom-designed gauge was begun for the Tombstone Aircraft Corporation. The costs incurred on the job are:
Materials ........................................................................ $20,000
Labor (1,000 hours x $15 per hour) ......................................... 15,000
Factory overhead ($30 per direct labor hour) ............................. 30,000
Total cost charged to Tombstone Aircraft Corporation job ............. $65,000
Before taking delivery of the gauges, engineers at Tombstone Aircraft changed the design specifications for the gauge. The change required the replacement of a part. The replacement part cost $1 and required 10 minutes for installation in each gauge. The change affected all 1,000 gauges manufactured on the job.
Required:
Prepare general journal entries to record the rework and the shipment of the completed job to the customer, assuming the company bills its jobs to customers at 150 percent of cost.