Deck 18: Spoilage, Rework, and Scrap

Question 1

Costs of normal spoilage are usually accounted for as

A) part of the cost of goods sold.
B) part of the cost of goods manufactured.
C) a separate line item in the income statement.
D) an asset in the balance sheet.
E) a liability in the balance sheet

Answer 1

B

Question 2

Scrap products may be reprocessed and subsequently sold as a finished good.

Answer 2

False

Question 3

Items with minimal sales value are known as

A) reworked units.
B) scrap.
C) spoilage.
D) ending work in process units.
E) abnormal spoilage.

Answer 3

B

Question 4

When calculating normal spoilage rates, the base should be the actual units started in production.

Question 5

Abnormal spoilage is spoilage that should arise under efficient operating conditions.

Question 6

Normal spoilage is avoidable and controllable.

Question 7

Companies that attempt to achieve zero defects in the manufacturing process treat all spoilage as which of the following?

A) scrap
B) reworked units
C) normal spoilage
D) abnormal spoilage
E) production costs added to inventory

Question 8

If the inspection point occurs at 33% into the production cycle, which of the following units would be allocated costs of spoilage detected at inspection?

A) all units in the system
B) units that are under 33% complete
C) units detected to be spoiled units
D) units that are more than 33% complete
E) units that are under 33% complete, and units detected to be spoiled units

Question 9

The costs of abnormal spoilage are written off as a loss; however, the costs of normal spoilage are treated as part of cost of goods manufactured.

Question 10

Normal spoilage rates for a manufacturing process should be computed on the basis of

A) total good units.
B) total actual units.
C) total reworked units.
D) total production units.
E) total actual units minus total reworked units.

Question 11

Spoilage that should not arise under efficient operating conditions is referred to as

A) ordinary spoilage.
B) normal spoilage.
C) abnormal spoilage.
D) uncontrollable
E) standard spoilage

Question 12

Spoilage issues arise in accounting for process costing but not in accounting for job costing.

Question 13

Deducting the disposal value from the costs of the spoiled goods accumulated to the point of inspection equals

A) the net cost of discarded goods.
B) the net cost of reworked goods.
C) the net cost of spoilage.
D) the net cost of scrap.
E) the net cost of disposals.

Question 14

Units of production that can be reprocessed and then be sold as finished goods are best known as

A) reworked units.
B) scrap.
C) normal spoilage.
D) work-in-process.
E) abnormal spoilage.

Question 15

Reworked goods are unacceptable units of production usually not capable of being repaired or converted into a salable product.

Question 16

The costs from Abnormal Spoilage should appear

A) on the balance sheet as part of finished goods inventory.
B) as a separate inventory item.
C) as a detailed item on the income statement.
D) as part of cost of goods manufactured.
E) either on the balance sheet as part of finished goods inventory, or as a separate inventory item.

Question 17

An item classified as spoilage has no value.

Question 18

Under efficient operating conditions, all spoilage is considered to be abnormal spoilage.

Question 19

A company whose goal is zero defects would usually treat all spoilage as abnormal.

Question 20

Costs of spoilage include all of the following EXCEPT

A) the opportunity cost of the plant and workers.
B) storage.
C) lost contribution margin.
D) the contribution margin gained on rework.
E) all costs incurred to make the spoiled product to date.

Question 21

Harriette has been reviewing the accounting system for her company and 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, Harriette 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 Harriette is having with the accounting system.

Question 22

For each of the following items identify whether it is spoilage, reworked units, or scrap.

Question 23

What are the objectives in accounting for spoilage?

Question 24

What is the direct material cost assigned to good units completed when spoilage units are recognized?

A) $150,000
B) $120,000
C) $112,500
D) $90,000
E) $77,000

Question 25

Busy Hands Craft Company is a small manufacturing company that specialized in arts and crafts items. It recently bought an old textile mill that it has refurbished to manufacture and dye special cloth to be sold in its craft shops. However, it discovered something new for its accounting system. The company had never before had finished goods that did not meet standard, leftover materials from processing runs, or unacceptable outputs.
Required:
As the business consultant for the company, explain how it can handle the items mentioned. Include any potential problems with the accounting procedures.

Question 26

Redwing Shoes manufactures shoes. All direct materials are included at the inception of the production process. For March there were 2,000 units in beginning inventory with a direct material cost of $1,000. Direct materials totalled $20,000 for the month. Work in process records revealed that 40,000 shoes were started in March and that 36,000 were finished. Normal spoilage of 5 percent 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. Redwing uses the weighted-average method.
Required:
a. What are the direct materials costs assigned to completed good units when spoilage units are recognized and when they are not recognized?
b. What are the direct material amounts allocated to the work in process ending inventory when spoilage units are recognized and when spoilage units are ignored?

Question 27

Use the information below to answer the following question(s).
Craft 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 non-detectable materials defects. Inspection occurs at the end of the process. Spoiled units generally constitute 5 percent of the good units. Data for December are as follows:

Abnormal spoilage totalled

A) 1,600 units.
B) 2,000 units.
C) 1,680 units.
D) 1,920 units.
E) 1,700 units.

Question 28

Spoilage costs allocated to completed units are larger by which method and by how much?

A) when spoiled units are recognized by $2,500
B) when spoiled units are recognized by $4,250
C) when spoiled units are ignored by $4,250
D) when spoiled units are ignored by $7,500
E) when spoiled units are recognized by $7,500

Question 29

What is the cost transferred out assuming spoilage units are ignored?

A) $120,000
B) $112,500
C) $90,000
D) $82,500
E) $37,500

Question 30

Distinguish among spoilage, reworked units, and scrap. Give an example of each.

Question 31

Marble Shop manufactures marble products. All direct materials are included at the inception of the production process. For April there was no beginning inventory in the processing plant. Direct materials totalled $420,000 for the month. Work in process records revealed that 7,500 tonnes were started in April and that 5,500 tonnes were finished; 500 tonnes were spoiled as expected. Ending work in process units are complete in respect to direct materials costs. Spoilage is not detected until the process is complete.
Required:
a. What is the cost per equivalent unit if spoiled units are recognized and if the units are ignored?
b. What are the costs assigned to completed units when spoilage units are recognized and when they are not recognized?
c. What are the costs transferred out if spoilage units are recognized and if they are ignored?
d. What are the amounts allocated to the work in process ending inventory when spoilage units are recognized and when spoilage units are ignored?

Question 32

What amounts are allocated to ending work-in-process inventory assuming spoilage units are recognized, and that they are ignored, respectively?

A) $27,500; $30,000
B) $30,000; $34,250
C) $30,000; $37,500
D) $37,500; $40,000
E) $30,000; $40,000

Question 33

Material left over when making a product is referred to as

A) reworked units.
B) spoilage.
C) scrap.
D) defective units.
E) indirect material.

Question 34

Use the information below to answer the following question(s).
Craft 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 non-detectable materials defects. Inspection occurs at the end of the process. Spoiled units generally constitute 5 percent of the good units. Data for December are as follows:

Normal spoilage totalled

A) 1,600 units.
B) 2,000 units.
C) 2,700 units.
D) 1,920 units.
E) 1,700 units.

Question 35

Use the information below to answer the following question(s).
Craft 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 non-detectable materials defects. Inspection occurs at the end of the process. Spoiled units generally constitute 5 percent of the good units. Data for December are as follows:

What is the number of total spoiled units?

A) 1,600 units
B) 2,000 units
C) 2,700 units
D) 3,600 units
E) 4,500 units

Question 36

Shazam Machines produces numerous types of money change machines. All machines are made in the same production department and many use exactly the same processes. Because customers have such different demands for the machine characteristics, the company uses a job costing system. Unfortunately, some of the production managers have been upset for the last few months when their jobs were charged with the spoilage that occurred over an entire processing run of several types of machines. Some of the best managers have even threatened to quit unless the accounting system is changed.
Required:
What recommendations can you suggest to improve the accounting for spoilage?

Question 37

You are the chief financial officer of a lumber mill, and you are becoming quite concerned about the spoilage, scrap, and reworked items associated with your production processes. Your firm produces mainly products for the building industry.
Required:
Discuss the problems associated with these items and the methods your company can use to reduce spoilage, scrap, and reworked items.

Question 38

The Clay Shop manufactures pottery products. All direct materials are included at the inception of the
production process. For April, there was no beginning inventory in the processing plant. Direct materials
totaled $310,000 for the month. Work-in-process records revealed that 5,000 kilograms were started in
April and that 3,000 kilograms were finished; 1,000 kilograms were spoiled as expected. Ending
work-in-process units are complete in respect to direct materials costs. Spoilage is not detected until the
process is complete.
Required:
a. What is the cost per equivalent unit if spoiled units are recognized or ignored?
b. What are the costs assigned to completed units when spoilage units are recognized or when they are not recognized?
c. What are the costs transferred out if spoilage units are recognized or ignored?
d. What are the amounts allocated to the work-in-process ending inventory when spoilage units are recognized or ignored?

Question 39

Explain the meaning of the terms spoilage, scrap, and rework. Provide an example of each. Is it possible for a single firm to have all three from a single productive process?

Question 40

What are the respective direct material costs per equivalent unit assuming spoiled units are recognized and that they are ignored?

A) $15.00; $20.00
B) $20.00; $25.00
C) $25.00; $30.00
D) $30.00; $35.00
E) $35.00; $40.00

Question 41

The goal of separately identifying abnormal spoilage is to

A) properly cost units in the system.
B) assist in performance measurement.
C) ensure that such units do not reach finished goods inventory.
D) reduce abnormal spoilage to an acceptable level.
E) reduce abnormal spoilage to nil.

Question 42

Use the information below to answer the following question(s).
Craft 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 non-detectable materials defects. Inspection occurs at the end of the process. Spoiled units generally constitute 5 percent of the good units. Data for December are as follows:

What are the amounts of direct materials and conversion costs assigned to ending work in process using the weighted-average process costing method?

A) $18,720; $24,000
B) $22,900; $19,820
C) $24,000; $18,720
D) $28,560; $14,160
E) $33,650; $14,140

Question 43

Use the information below to answer the following question(s).
Craft 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 non-detectable materials defects. Inspection occurs at the end of the process. Spoiled units generally constitute 5 percent of the good units. Data for December are as follows:

What cost is allocated to abnormal spoilage using the weighted-average process costing method?

A) $0
B) $7,360
C) $11,088
D) $16,400
E) $18,100

Question 44

Under the FIFO method, all spoilage costs are assumed to be

A) related to the units in beginning inventory, plus the units completed during the period.
B) related to the units completed during the period.
C) related to the units in ending inventory.
D) related to the units in both beginning and ending inventory plus the units completed during the period.
E) related to the units completed in both beginning and ending inventory.

Question 45

Which of the following statements is False?

A) The cost of spoiled units is the costs incurred prior to detection.
B) The unit costs of abnormal and normal spoilage are the same if detected simultaneously.
C) the timing of inspection affects the amount of abnormal spoilage.
D) Spoilage may occur at points other than the inspection point.
E) Spoilage units cannot be sold.

Question 46

Normal spoilage is usually computed on the basis of

A) the number of good units that pass inspection during the current period.
B) the number of units that pass the inspection point during the current period.
C) the number of units that are 100% complete as to materials.
D) the number of spoiled units that pass inspection during the current period.
E) the percentage of good units that passed inspection in the previous period.

Question 47

Use the information below to answer the following question(s).
Craft 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 non-detectable materials defects. Inspection occurs at the end of the process. Spoiled units generally constitute 5 percent of the good units. Data for December are as follows:

What is the total cost per equivalent unit using the weighted-average method of process costing?

A) $3.00
B) $3.60
C) $4.60
D) $6.60
E) $6.90

Question 48

Boss Cycle generally has spoiled goods during each job. Costs are assigned to normal spoilage at $10.00 per unit and abnormal spoilage at $20.00 per unit. Disposal fees typically run $5.00 per item. Boss Cycle has a policy never to rework spoiled units. Management believes that once a unit is damaged it cannot be reworked into a quality product. The losses are charged back to the specific job. What is the appropriate journal entry if 300 units are considered abnormal spoilage and are not disposed of in a process costing system?

A)
B)
C)
D)
E)

Question 49

Total cost per equivalent unit using the weighted-average method equals

A) the cost per equivalent unit of direct materials plus cost per spoiled unit.
B) the cost per equivalent unit of conversion costs plus cost per unit of spoiled materials.
C) the total costs divided by total equivalent units.
D) the cost per equivalent unit of direct materials plus the cost per equivalent unit of conversion costs.
E) the cost per equivalent unit of indirect materials plus cost per spoiled unit.

Question 50

The unit costs of abnormal and normal spoilage are equal, when the two are detected simultaneously.

Question 51

Use the information below to answer the following question(s).
Cartwright Custom Carpentry manufactures chairs in its Processing Department, and uses the FIFO cost flow assumption. 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 at the end of the process and spoiled units generally constitute 3 percent of the good output Information provided for March is as follows:

What costs are allocated to the ending work in process inventory for direct materials and conversion costs, respectively?

A) $28,250; $24,850
B) $30,000; $23,100
C) $30,000; $21,590
D) $39,500; $13,600
E) $40,000; $23,100

Question 52

Use the information below to answer the following question(s).
Cartwright Custom Carpentry manufactures chairs in its Processing Department, and uses the FIFO cost flow assumption. 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 at the end of the process, and spoiled units generally constitute 3 percent of the good output. Information provided for March is as follows:

What are the costs per equivalent unit for direct materials and conversion respectively?

A) $2.00; $1.54
B) $1.45; $1.54
C) $2.11; $1.62
D) $2.11; $1.18
E) $2.00; $1.18

Question 53

All spoilage costs are related to the units completed during the period using the unit costs of the current period under FIFO.

Question 54

Answer the following question(s) using the information below.
Samantha's Office Supplies manufactures desk organizers in its Processing Department. Direct materials are added at the beginning of the process and conversion costs are incurred evenly throughout the production cycle. Inspection takes place at the end of the process and spoiled units generally constitute 4% of the good units. Data provided for February are as follows:

What are the normal and abnormal spoilage units, respectively, for February when using FIFO?

A) 1,400 units; 1,480 units
B) 3,280 units; 1,640 units
C) 3,240 units; 7,760 units
D) 3,240 units; 11,000 units
E) 7,760 units; 1,640 units

Question 55

Under the weighted-average method, the costs of normal spoilage are added to the costs of their related good units. Hence, the cost per good unit completed and transferred out equals the total costs transferred out divided by the number of good units produced.

Question 56

Which of the following journal entries correctly represents the transfer of completed goods for the current period using the FIFO method of process costing?

A)
B)
C)
D)
E)

Question 57

If normal spoilage is presumed to occur prior to a specific inspection point, and abnormal spoilage is detected at other inspection points,

A) unit costs of abnormal spoilage will differ from the unit cost of normal spoilage.
B) all spoilage will be recognized proportionately across the various inspection points.
C) abnormal spoilage will generally be less than normal spoilage.
D) normal spoilage costs may be allocated prior to inspection of the products and abnormal spoilage will be allocated after the inspection of the products.
E) unit cost of abnormal spoilage will be the same as unit costs of normal spoilage.

Question 58

Use the information below to answer the following question(s).
Cartwright Custom Carpentry manufactures chairs in its Processing Department, and uses the FIFO cost flow assumption. 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 at the end of the process, and spoiled units generally constitute 3 percent of the good output. Information provided for March is as follows:

What are the normal and abnormal spoilage units, respectively, for March?

A) 2,580 units; 1,420 units
B) 1,950 units; 1,390 units
C) 1,690 units; 1,050 units
D) 1,420 units; 2,580 units
E) 1,140 units; 1,140 units

Question 59

Use the information below to answer the following question(s).
Cartwright 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 at the end of the process and spoiled units generally constitute 3 percent of the good units. Data provided for March is as follows:

What costs would be associated with normal and abnormal spoilage, respectively, using the FIFO method of process costing?

A) $5,890.64; $9,133.20
B) $5,890.64; $5,826.00
C) $6,469.64; $7,690.36
D) $7,690.36; $5,026.80
E) $9,133.20; $5,026.80

Question 60

Costs in beginning inventory are pooled with costs in the current period when determining the costs of good units under the weighted-average method of process costing.

Question 61

Answer the following question(s) using the information below.
Samantha's Office Supplies manufactures desk organizers in its Processing Department. Direct materials are added at the beginning of the process and conversion costs are incurred evenly throughout the production cycle. Inspection takes place at the end of the process and spoiled units generally constitute 4% of the good units. Data provided for February are as follows:

What are the normal and abnormal spoilage units, respectively, for October assuming Hawk uses the weighted average method of process costing?

A) 5,340 units; 1,660 units
B) 7,000 units; 1,660 units
C) 5,220 units; 1,780 units
D) 5,340 units; 1,780 units
E) 5,940 units; 1,060 units

Question 62

The Skate Board Company uses a process cost system for making skateboard wheels. Materials are added at the beginning of the process and conversion costs are uniformly incurred. At the beginning of September the work in process is 40 percent complete and at the end of the month it is 60 percent complete. Spoilage is detected at the end of the process. Other data for the month include:
Beginning work in process costs:
Required:
a. Prepare a production cost worksheet using the FIFO method of process costing. Recognize spoilage.
b. Prepare journal entries to record transferring out of cost from the work in process accounts.

Question 63

Wilson Sports uses a process costing system. Direct material A is placed into production at the beginning of the process, while direct material B is placed into production at the end of the process. Inspection occurs at the end of the process, before the addition of direct material B. Normal spoilage is 5% of good units. For March the company had the following activities:
Required:
Prepare a production cost worksheet using the weighted average method.

Question 64

New Image Sports uses a process costing system. Direct materials are placed into production at the beginning of the process. All spoilage is normal and is detected at the end of the process. For March the company had the following activities:
Required:
Prepare a production cost worksheet using the FIFO method.

Question 65

Answer the following question(s) using the information below.
Samantha's Office Supplies manufactures desk organizers in its Processing Department. Direct materials are added at the beginning of the process and conversion costs are incurred evenly throughout the production cycle. Inspection takes place at the end of the process and spoiled units generally constitute 4% of the good units. Data provided for February are as follows:

Assuming Hawk uses the FIFO method of process costing, the cost of the ending work in process inventory is:

A) $23,040
B) $23,142
C) $28,800
D) $28,920
E) $19,200

Question 66

Answer the following question(s) using the information below.
Samantha's Office Supplies manufactures desk organizers in its Processing Department. Direct materials are added at the beginning of the process and conversion costs are incurred evenly throughout the production cycle. Inspection takes place at the end of the process and spoiled units generally constitute 4% of the good units. Data provided for February are as follows:

What are the direct materials and conversion costs of all the units that were started and completed during February?

A) $314,280
B) $217,280
C) $318,160
D) $153,500
E) $143,360

Question 67

Answer the following question(s) using the information below.
Samantha's Office Supplies manufactures desk organizers in its Processing Department. Direct materials are added at the beginning of the process and conversion costs are incurred evenly throughout the production cycle. Inspection takes place at the end of the process and spoiled units generally constitute 4% of the good units. Data provided for February are as follows:

Assuming Hawk uses the weighted average method for process costing, the total cost of goods completed and transferred to finished goods is:

A) $854,400
B) $921,600
C) $877,440
D) $928,704
E) $905,664

Question 68

Answer the following question(s) using the information below.
Samantha's Office Supplies manufactures desk organizers in its Processing Department. Direct materials are added at the beginning of the process and conversion costs are incurred evenly throughout the production cycle. Inspection takes place at the end of the process and spoiled units generally constitute 4% of the good units. Data provided for February are as follows:

Assuming Hawk uses the FIFO method of process costing, the cost per equivalent unit for direct materials and conversion costs respectively are:

A) $3.20; $6.40
B) $3.64; $6.40
C) $2.81; $6.09
D) $3.22; $6.42
E) $3.44; $6.89

Question 69

Answer the following question(s) using the information below.
Samantha's Office Supplies manufactures desk organizers in its Processing Department. Direct materials are added at the beginning of the process and conversion costs are incurred evenly throughout the production cycle. Inspection takes place at the end of the process and spoiled units generally constitute 4% of the good units. Data provided for February are as follows:

Assuming Hawk uses the weighted average method of process costing, the cost per equivalent unit for direct materials and conversion costs respectively are:

A) $3.20; $6.40
B) $3.44; $6.89
C) $2.81; $6.09
D) $3.64; $6.40
E) $3.22; $6.42

Question 70

Dutton Industries is a manufacturer of cleaning products. Its main product goes through two departments: Mixing and Bottling. During June, the beginning WIP in the Mixing department was 32% complete as to conversion cost. The beginning inventory included $15,200 for materials and $19,800 for conversion costs. Ending WIP in the Mixing department was 80% complete. All direct materials are added at the beginning of the process in each department. Inspection occurs at the end of the process in both departments. Normal spoilage is 2.5% of good output in Mixing and 1.4% of good output in Bottling. Beginning WIP in Bottling was 60% complete with respect to conversion costs and ending WIP was 30% converted. Beginning WIP included $8,850 for direct materials, $72,200 for transferred in costs and $23,800 for conversion costs. Additional information follows:
Required:
Prepare a production cost worksheet using weighted-average for the Mixing department and FIFO for the Bottling department.

Question 71

Answer the following question(s) using the information below.
Samantha's Office Supplies manufactures desk organizers in its Processing Department. Direct materials are added at the beginning of the process and conversion costs are incurred evenly throughout the production cycle. Inspection takes place at the end of the process and spoiled units generally constitute 4% of the good units. Data provided for February are as follows:

What costs are allocated to the ending work-in-process inventory for direct materials and conversion costs, respectively, using the FIFO method of process costing?

A) $38,250; $4,850
B) $40,000; $23,100
C) $38,400; $4,950
D) $49,500; $38,400
E) $38,400; $19,800

Question 72

The Skate Board Company uses a process cost system for making skateboard wheels. Materials are added at the beginning of the process and conversion costs are uniformly incurred. At the beginning of September the work in process is 40 percent complete and at the end of the month it is 60 percent complete. Spoilage is detected at the end of the process. Other data for the month include:
Beginning work in process costs:
Required:
a. Prepare a production cost worksheet using the weighted-average method of process costing. Recognize spoilage.
b. Prepare journal entries to record transferring out of cost from the work in process accounts.

Question 73

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

Question 74

Viking 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 percent of direct manufacturing labour. Ending work in process was 60 percent complete. All spoilage is normal and is detected at end of the process.
Required:
Prepare a production cost worksheet assuming that spoilage is recognized and the weighted-average method is used.

Question 75

Answer the following question(s) using the information below.
Samantha's Office Supplies manufactures desk organizers in its Processing Department. Direct materials are added at the beginning of the process and conversion costs are incurred evenly throughout the production cycle. Inspection takes place at the end of the process and spoiled units generally constitute 4% of the good units. Data provided for February are as follows:

Using the FIFO method of process costing, what are the total costs of all the units that were initially in the beginning work-in-process inventory and were subsequently shipped?

A) $194,000
B) $16,500
C) $210,500
D) $97,000
E) $274,500

Question 76

Weather Instruments assembles products from component parts. It has two departments that process all products. During January the beginning work in process in the assembly department was half completed as to conversion and complete as to direct materials. The beginning inventory included $12,000 for materials and $4,000 for conversion costs. Overhead is applied at the rate of 50 percent of direct manufacturing labour costs. Ending work in process inventory in the assembly department was 40 percent complete. All spoilage is considered normal and is detected at the end of the process. Beginning work in process in the finishing department was 75 percent complete as to conversion and ending work in process was 25 percent converted. Direct materials are added at the end of the process. Beginning inventories included $16,000 for transferred-in costs and $10,000 for conversion costs. Overhead in this department is equal to direct manufacturing labour costs. Additional information about the two departments follows:
Required:
Prepare a production cost worksheet using weighted-average for the assembly department and FIFO for the finishing department.

Question 77

Playtime Ltd. manufactures toys in two departments: Forming and Finishing. During August, the beginning WIP in the Forming Department was 38% complete with respect to conversion, direct materials are added at the beginning of the process. The beginning inventory in Forming included $36,400 for materials and $9,400 for conversion costs. Ending WIP in the Forming department was 70% complete. In the second department, Finishing, direct materials are added at the end of the process. Beginning WIP in Finishing was 22% complete with respect to conversion costs and ending WIP was 85% converted. Beginning WIP included $35,200 for transferred in costs and $12,350 for conversion costs. Additional information follows:
Required:
Prepare a production cost worksheet using weighted-average for the Forming department and FIFO for the Finishing department.

Question 78

Answer the following question(s) using the information below.
Samantha's Office Supplies manufactures desk organizers in its Processing Department. Direct materials are added at the beginning of the process and conversion costs are incurred evenly throughout the production cycle. Inspection takes place at the end of the process and spoiled units generally constitute 4% of the good units. Data provided for February are as follows:

Assuming Hawk uses the FIFO method of process costing, the equivalent units for direct materials and conversion costs respectively for October are:

A) 87,000 units; 93,300 units
B) 87,000 units; 94,200 units
C) 80,000 units; 86,300 units
D) 87,000 units; 90,900 units
E) 99,000 units; 94,200 units

Question 79

Answer the following question(s) using the information below.
Samantha's Office Supplies manufactures desk organizers in its Processing Department. Direct materials are added at the beginning of the process and conversion costs are incurred evenly throughout the production cycle. Inspection takes place at the end of the process and spoiled units generally constitute 4% of the good units. Data provided for February are as follows:

Assuming Hawk uses the weighted average method for process costing, the equivalent units for direct materials and conversion for October are:

A) 89,000 units; 88,100 units
B) 87,000 units; 93,300 units
C) 82.000 units; 91.100 units
D) 99,000 units; 98,100 units
E) 92,000 units; 90,200 units

Question 80

Answer the following question(s) using the information below.
Samantha's Office Supplies manufactures desk organizers in its Processing Department. Direct materials are added at the beginning of the process and conversion costs are incurred evenly throughout the production cycle. Inspection takes place at the end of the process and spoiled units generally constitute 4% of the good units. Data provided for February are as follows:

What costs would be associated with normal and abnormal spoilage, respectively, using the FIFO method of process costing?

A) $12,571; $30,108
B) $30,108; $12,571
C) $1,257; $3,010
D) $8,000; $4,000
E) $10,627; $25,453