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How much of the loss on abnormal rework should be recorded

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Reference no: EM133173038

Question 1 - Goods totaling P80,000 were purchased on February 2 with terms of 2/10, n/30. Returns of P40,000 were made on February 10.

What discounts, if any, can be availed of if the invoice was paid on February 12 using the gross method (taken)?

Orange Corporation uses a job order costing system for clients related to custom-manufactured pulley systems. It is a wheel used to transmit power by means of a band, belt, cord, rope, or chain passing over its rim. Elmore Mechanical recently ordered 20,000 pulleys, and the job was assigned #BSAK34. Information for Job #BSAK34 revealed the following:

Direct material P40,800

Direct labor 49,200

Manufacturing overhead (applied at 140% of DL cost) 73,800

Final inspection of the pulleys revealed that 230 were defective. In correcting the defects, an additional P2,500 for direct material, P9,000 for direct labor costs plus overhead rate at predetermined rate were incurred. After the defects were corrected, the pulleys were included with the other goods units and shipped to the customers.

How much of the Loss on Abnormal Rework should be recorded assuming that all rework is abnormal.

Reference no: EM133173038

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