Question 1

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

Accepted Answer

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

Question 2

When scrap is returned to the storeroom, so that it may be used as direct material, which account is debited?

Accepted Answer

A) work-in-process control 
B) materials control 
C) manufacturing overhead control 
D) scrap inventory 
E) sales of scrap 
A) work-in-process control 
B) materials control 
C) manufacturing overhead control 
D) scrap inventory 
E) sales of scrap

Question 3

Klink 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 6% of units started.Direct materials are added at the beginning of the process.Inspection occurs at the 80% point.Other information about the job follows:
     Spoiled units have no salvage value.Required:
Make necessary journal entries to record all spoilage.

Accepted Answer

Average co

Question 4

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

Accepted Answer

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. 
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 5

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.

Accepted Answer

First, an explanation of each item is ne

Question 6

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 are the Waldorf Computer Systems Inc.respective direct material costs per equivalent unit assuming spoiled units are counted when computing output in equivalent units, and when not counting spoiled units in the equivalent unit total?

Accepted Answer

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 
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 7

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 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?

Accepted Answer

@#IMG-DLM& @#IMG-DLM& @#IMG-DLM& c.Endin

Question 8

Counting spoiled units as part of output units in a process-costing system usually results in a higher cost per unit.

Accepted Answer

A) True 
 B)False

Question 9

Items with minimal sales value are known as

Accepted Answer

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

Question 10

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 assuming the spoilage is recognized.

Accepted Answer

Total spoilage Forming = 29,000 + 228,00

Question 11

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 assuming that spoilage is recognized and the weighted-average method is used.
b.Prepare journal entries to record transferring out of cost from the work-in-process accounts.

Accepted Answer

a.Normal spoilage = (1,600 + 2

Question 12

When abnormal rework is distinguished from normal rework, and charged to a separate loss account, which of the following is a likely result?

Accepted Answer

A) Prices will have to increase on the company's products accordingly. 
B) The amount of normal spoilage unfavourable efficiency variances will be less. 
C) The amount of normal spoilage unfavourable efficiency variances will be more. 
D) The amount of normal spoilage unfavourable efficiency variances will be unchanged. 
E) The abnormal spoilage variance will be closed to cost of goods manufactured. 
A) Prices will have to increase on the company's products accordingly. 
B) The amount of normal spoilage unfavourable efficiency variances will be less. 
C) The amount of normal spoilage unfavourable efficiency variances will be more. 
D) The amount of normal spoilage unfavourable efficiency variances will be unchanged. 
E) The abnormal spoilage variance will be closed to cost of goods manufactured.

Question 13

Complete the following table by recording the units of normal and abnormal spoilage in the spaces provided.Assume that there are 4,000 total spoiled units at each stage of completion and that the normal spoilage rate is 5% of good units passing the inspection point.

Accepted Answer

@#IMG-DLM& @#IMG-DLM& @#IMG-DLM& @#IMG-DLM& Normal spoilage calculatio

Question 14

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?

Accepted Answer

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

Question 15

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

Accepted Answer

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

Question 16

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

Accepted Answer

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. 
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 17

A company manufactures shoes.Because of strict production specifications, the manufacturing department often has spoiled items.If the spoiled items are less than or equal to 5 percent of a job's total then the items are treated as normal spoilage.During February job #402 for 100 pairs of shoes had 7 spoiled items.The spoiled items were detected immediately before they were packaged.The marketing manager believes the spoiled items can be sold for $20 each.They had a cost at point of detection of $75 each.These costs included $25 for direct manufacturing labour, $45 for direct materials, and $5 for factory overhead.Required:
1.Make the necessary journal entry, or entries, to record the spoiled units.If the spoilage is normal it is assigned to an overhead control account.Assume the spoiled units can be sold for $20 each.2.Make the necessary journal entry, or entries, to record the rework cost.If the spoilage is normal it is assigned to an overhead control account.Assume the spoiled units can be reworked for $20 each: direct materials $5; labour $12; manufacturing overhead $3.

Accepted Answer

1. @#IMG-DLM& Manufa

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

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?

Accepted Answer

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 
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

Question 20

Which of the following journal entries could appropriately record the cash sale of scrap?

Accepted Answer

A)    
B)    
C)    
D)    
E)    
A)    
B)    
C)    
D)    
E)

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

When scrap is returned to the storeroom, so that it may be used as direct material, which account is debited?

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

Counting spoiled units as part of output units in a process-costing system usually results in a higher cost per unit.

Items with minimal sales value are known as

When abnormal rework is distinguished from normal rework, and charged to a separate loss account, which of the following is a likely result?

Complete the following table by recording the units of normal and abnormal spoilage in the spaces provided.Assume that there are 4,000 total spoiled units at each stage of completion and that the normal spoilage rate is 5% of good units passing the inspection point.

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

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

Which of the following journal entries could appropriately record the cash sale of scrap?

The Accountants Vital Role in Decision Making

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Management

Master Budget and Responsibility Accounting

Flexible Budgets, Variances, and Management Control: I

Flexible Budgets, Variances, and Management Control: II

Income Effects of Denominator Level on Inventory Valuation

Analysis of Cost Behaviour

Decision Making and Relevant Information

Pricing Decisions, Product Profitability Decisions, and Cost Management

Strategy, Balanced Scorecard, and Profitability Analysis

Period Cost Allocation

Cost Allocation: Joint Products and Byproducts

Revenue and Customer Profitability Analysis

Process Costing

Inventory Cost Management Strategies

Capital Budgeting: Methods of Investment Analysis

Transfer Pricing and Multinational Management Control Systems

Multinational Performance Measurement and Compensation

Filters

Exam 18: Spoilage, Rework, and Scrap

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

When scrap is returned to the storeroom, so that it may be used as direct material, which account is debited?

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

Counting spoiled units as part of output units in a process-costing system usually results in a higher cost per unit.

Items with minimal sales value are known as

When abnormal rework is distinguished from normal rework, and charged to a separate loss account, which of the following is a likely result?

Complete the following table by recording the units of normal and abnormal spoilage in the spaces provided.Assume that there are 4,000 total spoiled units at each stage of completion and that the normal spoilage rate is 5% of good units passing the inspection point.

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

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

Which of the following journal entries could appropriately record the cash sale of scrap?

The Accountants Vital Role in Decision Making

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Management

Master Budget and Responsibility Accounting

Flexible Budgets, Variances, and Management Control: I

Flexible Budgets, Variances, and Management Control: II

Income Effects of Denominator Level on Inventory Valuation

Analysis of Cost Behaviour

Decision Making and Relevant Information

Pricing Decisions, Product Profitability Decisions, and Cost Management

Strategy, Balanced Scorecard, and Profitability Analysis

Period Cost Allocation

Cost Allocation: Joint Products and Byproducts

Revenue and Customer Profitability Analysis

Process Costing

Inventory Cost Management Strategies

Capital Budgeting: Methods of Investment Analysis

Transfer Pricing and Multinational Management Control Systems

Multinational Performance Measurement and Compensation

Filters