Acer Manufacturing Company sells a variety of sporting goods and clothing. In a back room,...
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Acer Manufacturing Company sells a variety of sporting goods and clothing. In a back room, Acer has set up heat transfer equipment to personalize T-shirts for Little League teams . Each team has the name of the individual player put on the back of the Tshirt. One customer who is a Team Coach placed an order for his team consisting of 12 players: Mary Kate; Kayla; Katie; Tara; Heather, Emma; Kimberley, Jennifer, Darna; Elizabeth; Kyle and Wendy. The price per letter is P0.60. An employee of Acer worked on the job. When the customer returned, the names were on the front of the shirts.. The owner Mr. Acer assured the customer that the letters could be easily be removed. However, the process will ruin the old letters and new letters must be placed correctly on the shirt backs. He promised to correct the job immediately. Costs for transferring the letters are as follows: Letters (each)P0.45 Direct Labor (per hour) 8.00 Overhead (per direct labor hour) 4.00 The customer's order originally took one hour and 12 minutes of direct labor time. The removal process goes more quickly and should take only 30 minutes. Required: 1. What was the original cost of the job? 2. What is the cost of rework on the job? Assume that the employee who worked on the job failed to ask whether the names should be placed on the back or the front of the shirts, how should the rework cost be treated? 3. Now assume that the customer had mistakenly told the esployee to put the names on the front of the shirts. In an effort to keep his customer happy, Mr. Acer suggested that the customer pay only for the new letters and the firm would pay for the labor cost. How much did Mr. Acer charge the customer in addition to the original price of the job
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