Exam 18: Spoilage, Rework, and Scrap

Assume the amount of scrap is material and the scrap is sold immediately after it is produced. If the scrap attributable to a specific job is sold on account, the journal entry is:

Companies that attempt to achieve zero defects in the manufacturing process treat spoilage as:

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 2012 are as follows: Costs for April: -What is the number of total spoiled units?

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 2012 are as follows: Costs for April: -The cost per good unit in the weighted-average method is equal to the:

Scrap is residual material that results from manufacturing a product. and can have either a high or low sales value relative to the product with which it is associated.

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

Springfield Sign Shop manufactures only specific orders. It uses a standard cost system. During one large order for the airport 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 spoilage.

Accounting for scrap is very similar to accounting for byproducts.

Rework is finished production that is NOT in accordance with customer desires. The product is redone and sold as finished goods.

The inspection point is the:

Costs of normal spoilage are usually accounted for as:

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 2012 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?

Spoilage and rework costs are thoroughly captured in the accounting system.

A company might consider all spoilage to be abnormal if it wants to pay serious attention to the problem.

Normal spoilage should be computed using as the base the:

To simplify calculations under FIFO, spoiled units are accounted for as if they were started in the current period.

Answer the following questions using the information below: 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 nondetectible materials defects. Inspection occurs when units are 50% converted. Spoiled units generally constitute 5% of the good units. Data for December 2012 are as follows: Costs for December: -What is the number of total spoiled units?

Which of the following is NOT a major consideration when accounting for scrap?

Unacceptable units of production that are discarded or sold for reduced prices are referred to as:

Which of the following journal entries correctly represents the transfer of completed goods begun during February using the FIFO method of process costing?