Question

E18-33 (book/static) Heyer Appliances assembles dishwashers at its plant in​ Tuscaloosa, Alabama. In February 2017​, 60 circulation motors that cost ​ $110 each​ (from a new supplier who subsequently went​ bankrupt) were defective and had to be disposed of at zero net disposal value. Heyer Appliances was able to rework all 60 dishwashers by substituting new circulation motors purchased from one of its existing suppliers. Each replacement motor cost​ $125. Read the requirements

Requirement 1. What alternative approaches are there to account for the materials cost of reworked​ units? ​(Select all that​ apply.)

A. To charge the costs of rework to the current period as a separate expense item as abnormal rework.

B. To charge the costs of rework to the Wages Payable Control account as normal rework.

C. To charge the costs of rework to the Materials Control account as abnormal rework.

D. To charge the costs of rework to manufacturing overhead as normal rework

Answer 1

The material used for rework:

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Answer: D.  To charge the costs of rework to manufacturing overhead as normal rework

The material used in rework need to be credited to material control account as the volume of material account will get reduced due to usage of 60 circulation motors as a replacement material. As this replacement was not done for any specific job. client, same would pass for normal rework for all jobs and it is treated by debiting manufacturing overhead account and crediting material. wages and manufacturing allocation.