The Omega Company Manufactures Customized Motors on a Job-Order Basis

question 121

Short Answer

The Omega Company manufactures customized motors on a job-order basis. Job 492 is an order for 100 units. It requires the following: $\begin{array} { l r } \text { direct materials } & \$ 3,000 \\ \text { direct labor } ( \$ 10 / \mathrm { hr } ) & 1,000 \\ \text { overhead (150\% DLS) } & 1,500 \end{array}$
After inspection, 2 units required rework which required 8 additional direct labor hours and $\$ 60$ of materials. If the rework is considered abnormal spoilage, what is the journal entry for overhead control?
a. no journal entry is needed
b. materials $\$ 60$
payroll $\$ 80$
overhead control $\$ 140$
c. overhead control $\$ 140$
$\begin{array} { c c } \text { materials } & \$ 60 \\ \text { payroll } & \$ 80 \end{array}$
d. none of the above

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Definitions:

Marginal Revenue Productivity

The additional revenue generated by hiring one more unit of a factor of production, such as labor.

Profit-maximizing

A strategy or point at which a business reaches the highest possible difference between its total revenues and total costs.

Resources

Inputs or factors used in the production of goods and services, typically categorized into labor, capital, land, and entrepreneurship.

Appliance Manufacturer

A company engaged in the design, production, and sale of electrical or mechanical devices for domestic or commercial use.