Alpha Company Manufactures Customized Motors on a Job-Order Basis After Inspection, 2 Units Required Rework, Comprising 8 Additional Direct

question 89

Multiple Choice

Alpha Company manufactures customized motors on a job-order basis. Job 492 is an order for 100 units. It requires the following:
$\begin{array}{lr}\text { Direct materials } & \$ 3,000 \\\text { Direct labour }(\$ 10 / \mathrm{hr}) & 1,000 \\\text { Overhead }(150 \% \text { DL } \$) & 1,500\end{array}$
After inspection, 2 units required rework, comprising 8 additional direct labour hours and $60 of materials.
-Refer to the figure.If the rework is considered abnormal spoilage,what is the cost of job 492?

• A)$3,140
• B)$5,500
• C)$5,640
• D)$5,760

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Definitions:

Payback Period Method

A capital budgeting method that calculates the time required for an investment to generate cash flows to recover its initial cost.

Net Present Value

A method used in capital budgeting to evaluate the profitability of an investment by calculating the difference between the present value of cash inflows and outflows over a period of time.

Internal Rate of Return

A metric used in financial analysis to estimate the profitability of potential investments.

Time Value of Money

The concept that money available today is worth more than the same amount in the future due to its potential earning capacity.