Canyon City Co. uses a job order costing system that combines actual direct material and actual direct labor costs with a predetermined overhead charge based on machine hours. Expected overhead and machine hours of 

$1,421,000 and 145,000, respectively, were used in developing the predetermined rate for 2013.

 

During 2013, the company worked on Job #876 and incurred the following costs and machine hours:

Direct material $47,500

Direct labor 21,800

Machine hours 325

a. What is the cost per unit if 1,500 units were made? Round your answer to the nearest cent.

b. In completing Job #876, 30 units were defective and had to be reworked at a cost of $25 each. Assume that spoilage and rework costs were included in the original estimated overhead costs. Where does the $750 rework cost 

appear in the accounts of Canyon City Co.?

 

c. Disregard the facts in (b). Upon completing Job #876, the quality control inspector determined that 30 units were spoiled and would be unacceptable to the customer. Thirty additional good units were made at a total cost of 

$1,390. The spoiled units were sold for $240 as "seconds" to an outlet store. What is the total cost of Job #876?

Answer rating: 100% (QA)

a To calculate the cost per unit if 1500 units were made we need to consider direct material costs d... View the full answer