Exam 18: Spoilage, Rework, and Scrap

Answer the following question(s)using the information below: Hawk Ltd.uses process costing in its Fabricating Department.At the beginning of October, it had 12,000 units in beginning work-in-process that were 40% complete with respect to conversion.During October it put 87,000 units into production and completed 89,000 good units.At October 31, there were 3,000 units in ending work-in-process that were 70% complete with respect to conversion.Direct materials are added at the beginning of the process.Inspection occurs at the end of the process and normal spoilage is 6% of good output.Costs related to the beginning inventory were $36,800 for direct materials and $28,600 for conversion costs.During the month, the company issued $280,000 of direct materials and incurred $599,400 of conversion costs. -Assuming Hawk uses the FIFO method of process costing, the cost per equivalent unit for direct materials and conversion costs respectively are

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 assuming that spoilage is recognized and the weighted-average method is used.

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

Springfield Sign Shop manufactures only specific orders.It uses a standard cost system.During one large order for the transit authority, an unusual number of signs were spoiled.The normal spoilage rate is 10% of units started.The point of first inspection is half way through the process, the second is three-fourths through the process, and the final inspection is at the end of the process.Other information about the job is as follows: Average point of spoilage is the 3/4 completion point Required: Make necessary journal entries to record all transactions related to the transit authority job.

Answer the following questions using the information below: Jansen Corporation uses job costing in its' metal fabrication plant.During February Job 117 was completed and the scrap generated was not usable by other jobs.Job 124 was also completed in February and the scrap created was usable by other jobs. -Which of the following is the correct journal entry if Job 124 created scrap that is common to all jobs?

What is the effect of the following journal entry?

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

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

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 costs of normal spoilage are usually assigned to individual jobs in job costing.

The costs from abnormal spoilage should appear

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 costs assigned to completed units when spoilage units are recognized and when they are not recognized in the cost per equivalent unit? b.What are the costs transferred out if spoilage units are recognized and if they are ignored? c.What are the amounts allocated to the work-in-process ending inventory when spoilage units are recognized and when spoilage units are ignored?

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

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?

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

The Hawg Manufacturing Shop produces motorcycle parts.Typically, 20 pieces out of a job lot of 2,000 parts are normally spoiled.Costs are assigned at the inspection point, $100.00 per unit.Spoiled pieces may be disposed of for proceeds of $20.00 per unit.The spoiled goods must be inventoried appropriately when the normal spoilage is detected.The current job requires the production of 5,000 good parts.Which of the following journal entries properly reflects the recording of spoiled goods?

Hogan Ltd.uses a standard cost system in its manufacturing process.During a recent job, it noticed that its spoilage rate was high.Normal spoilage rate averages 8% of units started.Direct materials are added at the beginning of the process.Inspection occurs at the 75% point.Other information about the job follows: Spoiled units have no salvage value.Required: Make necessary journal entries to record all spoilage.

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

The calculation of equivalent units under standard costing is the same as under FIFO.

What is the effect of the following journal entry?