Reference no: EM132746544

Sanchez Company manufactures and distributes children games. Sometimes its orders have to be reworked. The average cost of the reworked orders is $16.50: $7.50 for labor, $6.00 for more materials, and $3.00 for overhead. This ratio of costs holds for the average original order. On a recent day, the shop reworked 100 orders. The original cost of the 100 orders totaled $2,400.

Problem 1: Create the journal entry to record the rework assuming it is charged to overhead. Also, prepare the journal entry to transfer the reworked items to finished goods inventory.