Ashton Electronics manufactures cell phones. You were given the following: 

 

Direct Materials          2,800 

Direct Labor                1,500 

Factory Overhead      1,200 

Unit cost                     5,500 

 

The factory overhead cost given above includes an allowance for spoilage of $500. A batch of 6,000 phones was worked on during the month. 180 units were defective. The defective units can be sold as toys for $1,100 each. 

 

Requirements: 

a) Assuming spoilage is not anticipated and the spoilage is due to abnormal circumstances, how much is the total cost of this batch? Show your solution. 

b) Assuming spoilage is normally anticipated and is specific to the job, how much is the per unit cost of this batch if the defective units were reworked at total cost of $1,800? Show your solution.

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