18-33 Reworked units, costs of rework. 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. 1. What alternative approaches are there to account for the materials cost of reworked units

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Business

Myers

2 June, 19:50

18-33 Reworked units, costs of rework. 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. 1. What alternative approaches are there to account for the materials cost of reworked units

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Mara · Answer 1

Explanation: The approaches used to account for the material costs of the reworked units are:

1. The cost of the reworked items can be charged to the manufacturing cost for the current period as the rework was done during the current period.

2. The cost of the reworked items can be expensed under a separate expense head which will eventually be treated with the current periods profit & loss account.