Exam 18: Spoilage, Rework, and Scrap

Answer the following questions using the information below: The following table presents the flow of production in units.Assume that there are 5,000 total spoiled units at each stage of completion and that the normal spoilage rate is 3% of good units passing the inspection point. -What is the number of abnormal spoiled units recognized at the 40% stage of completion?

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?

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?

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 $20,000 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 assuming that spoilage is recognized.

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.

Use the information below to answer the following question(s).Waldorf Computer Systems, Inc.manufactures computer memory cards, and uses process-costing.All direct materials are added at the inception of the production process.The accounting department noted that there was no beginning inventory for January.Direct Materials purchases totalled $150,000 during the month.Work-in-process records revealed that 7,500 cards were started in January, 4,500 cards were complete, and 1,500 units were spoiled as expected.Ending work-in-process units are complete in respect to direct materials costs.Inspection occurs at the end of the process. -What is the Waldorf Computer Systems Inc.direct material cost assigned to good units completed when spoilage units are recognized in the total equivalent units?

Normal spoilage is avoidable and controllable.

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.

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?

For each of the following items identify whether it is spoilage, reworked units, or scrap. A)spoilage B)spoilage and rework -Shavings

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?

An item classified as spoilage has no value.

There are two alternative points in time for recognizing scrap in the accounting records.What are these two points in time? Explain why a company might choose one over the other.

The timing of inspection at various stages of completion affects the amount of normal and abnormal spoilage.

Answer the following questions using the information below: 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 nondetectible defects.Inspection occurs when units are 50% converted.Spoiled fillets generally constitute 3.5% of the good fillets.Data for April 2018 are as follows: Costs for April: -What cost is allocated to abnormal spoilage using the weighted-average process-costing method?

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

What are the objectives in accounting for spoilage?

Material left over when making a product is referred to as

Robotoys Incorporated manufactures and distributes small robotic toys.Reworked units are common.The average cost of the reworked orders is $11.30: $4.15 for labour, $5.00 for more materials, and $2.15 for overhead.This ratio of costs holds for the average original order.On a recent day, the shop reworked 83 orders out of 700.The original cost of the 83 orders totaled $1,909.The average cost of all orders is $24.34, including rework, with an average selling price of $34.50.Required: Prepare the necessary journal entry to record the rework for the day if the shop charges such activities to Robo Department Overhead Control.Prepare journal entries to record all relevant rework charges as well as to transfer the reworked items finished goods to Finished Goods Inventory.

Costs of normal spoilage are usually accounted for as