Question 1

Which of the following statements is true of normal spoilage and abnormal spoilage?

Accepted Answer

A) Normal spoilage is inherent in a particular production process,whereas abnormal spoilage is not inherent in a particular production process. 
B) Abnormal spoilage arises even when the process is carried out in an efficient manner,whereas normal spoilage does not arise when the process is carried out in an efficient manner. 
C) Normal spoilage is usually regarded as avoidable and controllable,whereas abnormal spoilage is unavoidable and uncontrollable. 
D) The costs of normal spoilage are recorded as a loss as a separate line item in an income statement,whereas costs of abnormal spoilage are included as a component of the costs of good units manufactured. 
A) Normal spoilage is inherent in a particular production process,whereas abnormal spoilage is not inherent in a particular production process. 
B) Abnormal spoilage arises even when the process is carried out in an efficient manner,whereas normal spoilage does not arise when the process is carried out in an efficient manner. 
C) Normal spoilage is usually regarded as avoidable and controllable,whereas abnormal spoilage is unavoidable and uncontrollable. 
D) The costs of normal spoilage are recorded as a loss as a separate line item in an income statement,whereas costs of abnormal spoilage are included as a component of the costs of good units manufactured. A

Question 2

Maxire Shoes manufactures shoes.All direct materials are included at the inception of the production process.For March,there were 2,800 units in beginning inventory with a direct material cost of $1,400.Direct materials totaled $35,000 for the month.Work-in-process records revealed that 70,000 units were started in March and that 60,000 were finished.When March ended there were 12,800 units in work-in-process.Normal spoilage of 2% of units finished was incurred.Ending work-in-process units are complete in respect to direct materials costs.Spoilage is not detected until the process is complete.Endicott uses the weighted-average method.
Required:
a.What are the direct materials costs assigned to completed good units?
b.What are the direct material amounts allocated to the work-in-process ending inventory?

Accepted Answer

a.Equivalent units (spoilage recognized)= 2,800 + 70,000 = 72,800
     b.Ending work in process:

Question 3

When a unit has to be reworked,the rework may be classified in three ways.What are those ways,and how does the accounting for each differ?

Accepted Answer

The rework may be (1)normal rework attributable to a specific job; (2)normal rework common to all jobs;or (3)abnormal rework.If the rework is attributable to a specific job,then the cost of such rework should be charged to that job.If the rework is common to all jobs,then the cost of the rework should be charged to manufacturing overhead and spread across all jobs.If the rework is abnormal rework then the cost of the rework should be charged as a loss to the period in which the rework is required.

Question 4

Verer Custom Carpentry manufactures chairs in its Processing Department.Direct materials are included at the inception of the production cycle and must be bundled in single kits for each unit.Conversion costs are incurred evenly throughout the production cycle.Inspection takes place as units are placed into production.After inspection,some units are spoiled due to undetectable material defects.Spoiled units generally constitute 4% of the good units.Data provided for March 2017 are as follows:

Costs:
 
What are the normal and abnormal spoilage units,respectively,for March when using FIFO?

Accepted Answer

A) 3204 units;1396 units 
B) 1968 units;1420 units 
C) 9749 units;1540 units 
D) 530 units;2032 units 
A) 3204 units;1396 units 
B) 1968 units;1420 units 
C) 9749 units;1540 units 
D) 530 units;2032 units

Question 5

Venosis Sports is a manufacturer of sportswear.It produces all of its products in one department.The information for the current month is as follows:

Beginning work in process was half complete as to conversion.Direct materials are added at the beginning of the process.Factory overhead is applied at a rate equal to 50% of direct manufacturing labor.Ending work in process was 60% complete.All spoilage is normal and is detected at end of the process.
Required:
Prepare a production cost worksheet if spoilage is recognized and the weighted-average method is used.

Accepted Answer

@#IMG-DLM&_TB5540_00_TB5540_00 @#IMG-DLM&_TB5540_00_TB5540_0

Question 6

Outose Concept manufactures small tables in its Processing Department.Direct materials are added at the initiation of the production cycle and must be bundled in single kits for each unit.Conversion costs are incurred evenly throughout the production cycle.Before inspection,some units are spoiled due to undetectable materials defects.Inspection occurs when units are 55% converted.Spoiled units generally constitute 5% of the good units.Data for December 2017 are as follows:
 
Costs for December:
 
What is the amount of direct materials and conversion costs assigned to ending work in process using the weighted-average process-costing method? (Round any cost per unit calculations to the nearest cent. )

Accepted Answer

A) $40,484;$49,644 
B) $74,860;$51,870 
C) $74,100;$52,402 
D) $156,293;$12,620 
A) $40,484;$49,644 
B) $74,860;$51,870 
C) $74,100;$52,402 
D) $156,293;$12,620

Question 7

When inventories are present,classifying spoilage as normal rather than abnormal results in an decrease in current operating income.

Accepted Answer

A) True 
 B)False

Question 8

Harriet has been reviewing the accounting system for her company and she is very concerned about the accounting for spoilage.It appears that spoilage is accounted for only at the end of the processing cycle.While this concept is acceptable in general,Harriet believes that a better method can be found to properly account for the spoilage when it occurs.She believes that there must be something better than the weighted-average method of accounting for spoilage.She would like the company to use a method that provides closer tracking of the spoilage with the accounting for the spoilage.
Required:
Discuss the problems Harriet is having with the accounting system.

Accepted Answer

The main problem Harriet has is that she

Question 9

What are the advantages of costing rework?

Accepted Answer

Costing rework focuses managers' attenti

Question 10

Under standard costing,there is no need to calculate a cost per equivalent unit.

Accepted Answer

A) True 
 B)False

Question 11

The unit costs of normal and abnormal spoilage are the same when the two are detected at the same inspection point.

Accepted Answer

A) True 
 B)False

Question 12

Samantha's Office Supplies manufactures desk organizers in its Processing Department.Direct materials are included at the inception of the production cycle and must be bundled in single kits for each unit.Conversion costs are incurred evenly throughout the production cycle.Inspection takes place as units are placed into production.After inspection,some units are spoiled due to undetectable material defects.Spoiled units generally constitute 3% of the good units.Data provided for February 2017 are as follows:

Costs:
 
What are the direct material and conversion costs of all the units that were initially in the beginning work-in-process inventory and were subsequently shipped? Take into account the costs related to the completion of the conversion of the units during the month.Use the FIFO method of process costing.(Round any cost per unit calculations to the nearest cent. )

Accepted Answer

A) $78,336;$44,000 
B) $0;$47,002 
C) $54,835;$48,782 
D) $40,239;$18,605 
A) $78,336;$44,000 
B) $0;$47,002 
C) $54,835;$48,782 
D) $40,239;$18,605

Question 13

Cost of spoiled units equals ________.

Accepted Answer

A) all costs incurred in producing them up to the point of delivery 
B) all costs incurred in producing them up to the point of inspection 
C) all costs incurred in producing them up to the point of selling 
D) all costs incurred in producing them up to the point of packaging 
A) all costs incurred in producing them up to the point of delivery 
B) all costs incurred in producing them up to the point of inspection 
C) all costs incurred in producing them up to the point of selling 
D) all costs incurred in producing them up to the point of packaging

Question 14

What are the objectives in accounting for spoilage?

Accepted Answer

The key objectives in accounting for spo

Question 15

The costs of normal spoilage are allocated to the units in ending work-in-process inventory,in addition to completed units if the units ________.

Accepted Answer

A) in ending inventory have not passed the inspection point 
B) in ending work-in-process inventory have passed the inspection point 
C) in ending work in process inventory are more than 25% complete 
D) in ending work-in-process inventory are less than 25% complete 
A) in ending inventory have not passed the inspection point 
B) in ending work-in-process inventory have passed the inspection point 
C) in ending work in process inventory are more than 25% complete 
D) in ending work-in-process inventory are less than 25% complete

Question 16

Fish Fillet Incorporated obtains fish and then processes them into frozen fillets and then prepares the frozen fish fillets for distribution to its retail sales department.Direct materials are added at the initiation of the cycle.Conversion costs are incurred evenly throughout the production cycle.Before inspection,some fillets are spoiled due to undetectable defects.Spoiled fillets generally constitute 5% of the good fillets.Data for April 2017 are as follows:
 
Costs for April:
 
Normal spoilage totals ________.

Accepted Answer

A) 9200 units 
B) 0 units 
C) 22,000 units 
D) 12,800 units 
A) 9200 units 
B) 0 units 
C) 22,000 units 
D) 12,800 units

Question 17

Normal spoilage is computed on the basis of the number of ________.

Accepted Answer

A) good units that pass inspection during the current period 
B) units that pass the inspection point during the current period 
C) units that are in ending work in process 
D) units that started during the particular period 
A) good units that pass inspection during the current period 
B) units that pass the inspection point during the current period 
C) units that are in ending work in process 
D) units that started during the particular period

Question 18

700 shirts are sold as seconds at $18 per shirt.Cost of spoiled shirts is $501,400.Cost of shirts at inspection point equals $9,508,000.Calculate the net cost of the spoilage.

Accepted Answer

A) $9,495,400 
B) $488,800 
C) $514,000 
D) $9,520,600 
A) $9,495,400 
B) $488,800 
C) $514,000 
D) $9,520,600

Question 19

Colil Computer Systems,Inc. ,manufactures printer circuit cards.All direct materials are added at the inception of the production process.During January,the accounting department noted that there was no beginning inventory.Direct materials of $310,000 were used during the month.Work-in-process records revealed that 12,000 card units were started in January,6000 card units were complete,and 4600 card units were spoiled as expected.Ending work-in-process card units are complete in respect to direct materials costs.Spoilage is not detected until the process is complete.
What is the direct material cost per equivalent unit? (Please round the final answer to the nearest cent. )

Accepted Answer

A) $17.22 
B) $25.83 
C) $21.68 
D) $29.99 
A) $17.22 
B) $25.83 
C) $21.68 
D) $29.99

Question 20

When rework is normal and NOT attributable to a specific job,the costs of rework are charged to manufacturing overhead and are spread,through overhead allocation,over all jobs.

Accepted Answer

A) True 
 B)False

Which of the following statements is true of normal spoilage and abnormal spoilage?

When a unit has to be reworked,the rework may be classified in three ways.What are those ways,and how does the accounting for each differ?

When inventories are present,classifying spoilage as normal rather than abnormal results in an decrease in current operating income.

What are the advantages of costing rework?

Under standard costing,there is no need to calculate a cost per equivalent unit.

The unit costs of normal and abnormal spoilage are the same when the two are detected at the same inspection point.

Cost of spoiled units equals ________.

What are the objectives in accounting for spoilage?

The costs of normal spoilage are allocated to the units in ending work-in-process inventory,in addition to completed units if the units ________.

Normal spoilage is computed on the basis of the number of ________.

700 shirts are sold as seconds at $18 per shirt.Cost of spoiled shirts is $501,400.Cost of shirts at inspection point equals $9,508,000.Calculate the net cost of the spoilage.

When rework is normal and NOT attributable to a specific job,the costs of rework are charged to manufacturing overhead and are spread,through overhead allocation,over all jobs.

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets,direct-Cost Variances,and Management Control

Flexible Budgets, overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy,balanced Scorecard,and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Balanced Scorecard: Quality and Time

Inventory Management, just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, transfer Pricing, and Multinational Considerations

Performance Measurement, compensation, and Multinational Considerations

Filters

Exam 18: Spoilage, rework, and Scrap

Which of the following statements is true of normal spoilage and abnormal spoilage?

When a unit has to be reworked,the rework may be classified in three ways.What are those ways,and how does the accounting for each differ?

When inventories are present,classifying spoilage as normal rather than abnormal results in an decrease in current operating income.

What are the advantages of costing rework?

Under standard costing,there is no need to calculate a cost per equivalent unit.

The unit costs of normal and abnormal spoilage are the same when the two are detected at the same inspection point.

Cost of spoiled units equals ________.

What are the objectives in accounting for spoilage?

The costs of normal spoilage are allocated to the units in ending work-in-process inventory,in addition to completed units if the units ________.

Normal spoilage is computed on the basis of the number of ________.

700 shirts are sold as seconds at $18 per shirt.Cost of spoiled shirts is $501,400.Cost of shirts at inspection point equals $9,508,000.Calculate the net cost of the spoilage.

When rework is normal and NOT attributable to a specific job,the costs of rework are charged to manufacturing overhead and are spread,through overhead allocation,over all jobs.

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets,direct-Cost Variances,and Management Control

Flexible Budgets, overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy,balanced Scorecard,and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Balanced Scorecard: Quality and Time

Inventory Management, just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, transfer Pricing, and Multinational Considerations

Performance Measurement, compensation, and Multinational Considerations

Filters