GYM Machine Shop manufactures jacks equipment. One order comes from Muscle, Inc. for 2,000 jacks, which showed the following costs per unit: Materials $40.00 Labor $17.50 FOH is 160% of direct labor...

GYM Machine Shop manufactures jacks equipment. One order comes from Muscle, Inc. for 2,000 jacks, which showed the following costs per unit:

Final inspection revealed that 150 of the jacks were not properly produced. Correction of each unit requires 2.00 for materials, 3.00 for labor and factory overhead at an appropriate rate.

1. If defect is the result of internal failure, what is the cost of each unit of jacks produced?

a. $78.27
b. $85.50
c. $80.39
d. $84.46

2. If defect is the result of change in specifications imposed by the customers, what is the cost of each unit of jacks produced?

a. $78.27
b. $85.50
c. $80.39
d. $84.46