Exam 18: Spoilage, Rework, and Scrap

Intelligent Composite Materials Inc.is a manufacturer of advanced composites that can be formed electronically.Direct materials are added at the start of the production process.Conversion costs are added evenly during the process.Some units of the product XJ1 are spoiled as a result of defects not detectable before inspection of finished goods.Spoiled units are disposed of at zero net disposal value.The company uses standard costs with $300 per equivalent unit for direct materials, and $90 per equivalent unit for conversion costs for both beginning work-in-process inventory and work done during the period.Summary data for the month of July follow: Required: a.Prepare a production cost report assuming the spoilage is recognized. b.Prepare the necessary journal entry to record 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 is the total cost per equivalent unit using the weighted-average method of process costing?

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

Carriage Florists operate a flower shop.Because most of the orders are via telephone, fax or email, numerous orders have to be reworked.The average cost of the reworked orders is $4: $2.50 for labour, $1 for more flowers, and $0.50 for overhead.This ratio of costs holds for the average original order and includes a provision for rework common to all jobs.On a recent day the shop reworked 32 orders out of 166.The original cost of the 32 orders totalled $480.The average cost of all orders is $12.50, including rework, with an average selling price of $20.Required: Prepare the necessary journal entry, or entries, to record the rework for the day if the shop charges such activities to Arrangement Department Overhead Control.Prepare a journal entry to transfer the finished goods to Finished Goods Inventory.

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?

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. -At Waldorf Computer Systems Inc.what amounts are allocated to ending work-in-process inventory assuming spoilage units are recognized in the equivalent unit calculation, and that they are ignored, respectively?

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

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 is the number of total spoiled units?

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 weighted-average method for process costing, the equivalent units for direct materials and conversion for October are

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. -At Waldorf Computer Systems Inc.spoilage costs allocated to completed units are larger by which method and by how much?

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 company manufactures leather jackets.Because of strict production specifications, the manufacturing department often has spoiled items.If the spoiled items are under 5 percent of a job's total items they are treated as normal spoilage.During February job #301 for 200 jackets had 8 spoiled items.The spoiled items were detected immediately before they were packaged.They had already passed the safety inspection.The marketing manager believes the items can be sold for $150 each.They had a cost at point of detection of $500 each.These costs included $250 for direct manufacturing labour, $200 for direct materials, and $50 for factory overhead.Required: a.Make the necessary journal entry, or entries, to record the spoiled units if the spoilage is normal and assigned to an overhead control account. b.Make the necessary journal entry, or entries, to record the spoiled units if the spoilage is assigned to job #301.

Sales of scrap may be traced to the individual jobs in which it occurred when the ________ system is used.

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

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