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Question - A job order for 500 units of children's party giveaways were processed with costs of $80,000 and $30,000 for direct materials and direct labor, respectively. Factory overhead was applied at 50% of direct labor cost which excludes a 5% provision for spoilage. Prior to transfer to the storeroom, 25 units were found to be spoiled with an estimated market value of $50 per unit.
Required -
A. What is the unit cost of the goods transferred to the storeroom if the loss is charged to total production?
B. Assuming that the 25 units were only defective and are not sold but instead reworked for total direct materials cost of $375 and total direct labor cost of $500. What is the unit cost of the goods transferred to storeroom if the reworked costs are charged to the specific job?
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