Barney plc manufactures deluxe cat baskets in batches of 300. During April, Batch
no. 567 took 20 hours to machine. Sixty cat baskets failed to pass an inspection, but
of these, 40 were thought to be rectifiable. The remaining 20 were scrapped, and the
scrap value was credited to the cost of the batch as a whole. Rectification work took
nine hours. Costs were as follows:
| Batch no. 567 | £ |
| Raw materials per cat basket | 1.60 |
| Scrap value per cat basket | 0.86 |
| Machinists’ hourly rate | 4.20 |
| Machine-hour overhead | 3.60 |
| Setting up of machine – normal machining | 21.00 |
| Setting up of machine – rectification | 18.00 |
Calculate:
(a) The cost of a full batch, in total and per unit, if all units pass inspection.
(b) The actual cost of Batch no. 567, in total and per unit, after crediting the recovery
value of the scrapped items, and including the rectification costs.
(c) The loss incurred because of defective work.
