The Following Costs Were Incurred by Home Master, a Company

question 19

Essay

The following costs were incurred by Home Master, a company that makes washing machines.
a. The company requires each machine to complete 5 spin cycles before it is boxed and shipped.
b. The company replaced switches on 10% of machines sold last year.
c. Cost of rewiring the machines that failed the 5-spin cycle test.
d. The company sent its machine inspectors to a two-week training program on the new model that is to be released this year. It is hoped that this will lower the defect rate on the new model.
Required: Classify each of these costs as a prevention, appraisal, internal failure, or external failure cost.

Identify the components of manufacturing costs, including direct materials, direct labor, and factory overhead.

Comprehend the flow and accounting treatment of materials, labor, and overhead in a job order costing system.

Record and interpret journal entries related to the job order cost accounting cycle.

Understand the role and calculation of direct labor in determining overhead rates and product costs.

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Definitions:

SUMIF Function

A function in spreadsheet software that calculates the sum of a range of cells that meet a specified criterion.

Cells

Individual containers in spreadsheet software that hold data, capable of containing text, numbers, or formulas.

Tracer Arrows

Visual indicators in spreadsheet software that show relationships between cells and formulas.

Named Ranges

A feature in spreadsheet software that allows a user to assign a descriptive name to a cell or range of cells.