Question

(quaestion 5) Parish Company performed a job for Perlmutter Company that cost $105,000 to manufacture 525 units. Of those units, 75 were spoiled – 25 as a normal part of the production process, and 50 when lightning hit the storage facility where they were being kept. In addition, 10 units in that storage facility were repaired at a cost of $80 per unit, and the customer requested that 15 additional units be repaired, which cost $90 per unit.

                        What is the cost of the job after accounting for spoilage and rework?

Answer 1

Calculation of Cost of Job after accounting for spoilage and rework

	$$
Manufacturing Cost	$105,000
Plus: Repair Cost of 10 Units (10*$80)	$800
Plus: Repair Cost of 15 additional units (15*$90)	$1,350
Total Cost of the Job	$107,150

Note – 25 Units are spoiled as a normal part of process. Hence the normal loss is absorbed by the good units produced.

Looking to the working of question, the customer requested only 15 additional units to be repaired.

For the Parish Company, the total cost of this Job is $107,150.