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Question - Raghnall Electronics Inc manufactures gauges and instruments for aircraft. During the current year, an order for P2,500 units of a custom design gauge was begun for the Suffolk Aircraft International. The cost incurred on the job are: Materials - P50,000; Labor (2,500 hours x P15 per hour) - P37,500; Factory Overhead (P30 pr direct labor hour) - P75,000. Before taking delivery of the gauges, engineers at Suffolk Aircraft changed the design specification. The change requires the replacement of some parts. The material cost was P1 and required 25 minutes for installation in each gauge. The change affected all 2,500 gauges manufactured on the job.
Requirements -
1. Compute the cost of job shipped to the customer.
2. Compute the cost of job shipped to the customer if the rework is due to internal failure.
3. Compute the unit cost of job if the rework is considered abnormal.
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