Question 1

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 2

Marble Shop manufactures marble 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 totalled $420,000 for the month. Work in process records revealed that 7,500 tonnes were started in April and that 5,500 tonnes were finished; 500 tonnes 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 is the cost per equivalent unit if spoiled units are recognized and if the units are ignored?
b. What are the costs assigned to completed units when spoilage units are recognized and when they are not recognized?
c. What are the costs transferred out if spoilage units are recognized and if they are ignored?
d. 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& b. Assigned to good units com

Question 3

Use the information below to answer the following question(s).
Cartwright Custom Carpentry manufactures chairs in its Processing Department. 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 units. Data provided for March is as follows:
  
-What costs would be associated with normal and abnormal spoilage, respectively, using the FIFO method of process costing?

Accepted Answer

A)  $5,890.64; $9,133.20 
B)  $5,890.64; $5,826.00 
C)  $6,469.64; $7,690.36 
D)  $7,690.36; $5,026.80 
E)  $9,133.20; $5,026.80 
A)  $5,890.64; $9,133.20 
B)  $5,890.64; $5,826.00 
C)  $6,469.64; $7,690.36 
D)  $7,690.36; $5,026.80 
E)  $9,133.20; $5,026.80

Question 4

An item classified as spoilage has no value.

Accepted Answer

A) True 
 B)False

Question 5

The costs from Abnormal Spoilage should appear

Accepted Answer

A)  on the balance sheet as part of finished goods inventory. 
B)  as a separate inventory item. 
C)  as a detailed item on the income statement. 
D)  as part of cost of goods manufactured. 
E)  either on the balance sheet as part of finished goods inventory, or as a separate inventory item. 
A)  on the balance sheet as part of finished goods inventory. 
B)  as a separate inventory item. 
C)  as a detailed item on the income statement. 
D)  as part of cost of goods manufactured. 
E)  either on the balance sheet as part of finished goods inventory, or as a separate inventory item.

Question 6

What is the effect of the following journal entry?

Accepted Answer

A)  to allocate $15 of overhead as rework costs 
B)  to expense $125 of overhead as rework costs 
C)  to set up rework costs on the balance sheet 
D)  to allocate $15 of overhead as rework costs, and to expense $125 of overhead as rework costs 
E)  to accumulate rework costs so they can be assigned to a specific job 
A)  to allocate $15 of overhead as rework costs 
B)  to expense $125 of overhead as rework costs 
C)  to set up rework costs on the balance sheet 
D)  to allocate $15 of overhead as rework costs, and to expense $125 of overhead as rework costs 
E)  to accumulate rework costs so they can be assigned to a specific job

Question 7

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 spoilage.

Accepted Answer

Average cost per sig

Question 8

What amounts are allocated to ending work-in-process inventory assuming spoilage units are recognized, and that they are ignored, respectively?

Accepted Answer

A)  $27,500; $30,000 
B)  $30,000; $34,250 
C)  $30,000; $37,500 
D)  $37,500; $40,000 
E)  $30,000; $40,000 
A)  $27,500; $30,000 
B)  $30,000; $34,250 
C)  $30,000; $37,500 
D)  $37,500; $40,000 
E)  $30,000; $40,000

Question 9

The standard-costing method

Accepted Answer

A)  adds a layer of complexity to the calculation of equivalent-unit costs in a process-costing environment. 
B)  makes calculating equivalent-unit costs unnecessary. 
C)  requires an analysis of the spoilage costs in beginning inventory. 
D)  requires an analysis of the spoilage costs in ending inventory. 
E)  requires a calculation of the cost allocation rate. 
A)  adds a layer of complexity to the calculation of equivalent-unit costs in a process-costing environment. 
B)  makes calculating equivalent-unit costs unnecessary. 
C)  requires an analysis of the spoilage costs in beginning inventory. 
D)  requires an analysis of the spoilage costs in ending inventory. 
E)  requires a calculation of the cost allocation rate.

Question 10

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

Accepted Answer

A)  total good units. 
B)  total actual units. 
C)  total reworked units. 
D)  total production units. 
E)  total actual units minus total reworked units. 
A)  total good units. 
B)  total actual units. 
C)  total reworked units. 
D)  total production units. 
E)  total actual units minus total reworked units.

Question 11

Explain the meaning of the terms spoilage, scrap, and rework. Provide an example of each. Is it possible for a single firm to have all three from a single productive process?

Accepted Answer

Spoilage is units of production that do

Question 12

What is the cost transferred out assuming spoilage units are ignored?

Accepted Answer

A)  $120,000 
B)  $112,500 
C)  $90,000 
D)  $82,500 
E)  $37,500 
A)  $120,000 
B)  $112,500 
C)  $90,000 
D)  $82,500 
E)  $37,500

Question 13

What are the objectives in accounting for spoilage?

Accepted Answer

The key objectives in accounting for spo

Question 14

The costs of normal spoilage are assigned to individual jobs in process costing, and in job costing.

Accepted Answer

A) True 
 B)False

Question 15

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:
  
-Assuming Hawk uses the weighted average method for process costing, the total cost of goods completed and transferred to finished goods is:

Accepted Answer

A)  $854,400 
B)  $921,600 
C)  $877,440 
D)  $928,704 
E)  $905,664 
A)  $854,400 
B)  $921,600 
C)  $877,440 
D)  $928,704 
E)  $905,664

Question 16

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 17

Which of the following can be used in accounting for spoilage?

Accepted Answer

A)  standard costs 
B)  FIFO 
C)  Weighted average 
D)  FIFO and weighted average but not standard costs 
E)  FIFO and weighted average and standard costs 
A)  standard costs 
B)  FIFO 
C)  Weighted average 
D)  FIFO and weighted average but not standard costs 
E)  FIFO and weighted average and standard costs

Question 18

When normal spoilage is detected, the work-in-process control account is debited in a job costing system.

Accepted Answer

A) True 
 B)False

Question 19

What is the direct material cost assigned to good units completed when spoilage units are recognized?

Accepted Answer

A)  $150,000 
B)  $120,000 
C)  $112,500 
D)  $90,000 
E)  $77,000 
A)  $150,000 
B)  $120,000 
C)  $112,500 
D)  $90,000 
E)  $77,000

Question 20

Material left over when making a product is referred to as

Accepted Answer

A)  reworked units. 
B)  spoilage. 
C)  scrap. 
D)  defective units. 
E)  indirect material. 
A)  reworked units. 
B)  spoilage. 
C)  scrap. 
D)  defective units. 
E)  indirect material.

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

An item classified as spoilage has no value.

The costs from Abnormal Spoilage should appear

What is the effect of the following journal entry?

What amounts are allocated to ending work-in-process inventory assuming spoilage units are recognized, and that they are ignored, respectively?

The standard-costing method

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

Explain the meaning of the terms spoilage, scrap, and rework. Provide an example of each. Is it possible for a single firm to have all three from a single productive process?

What is the cost transferred out assuming spoilage units are ignored?

What are the objectives in accounting for spoilage?

The costs of normal spoilage are assigned to individual jobs in process costing, and in job costing.

Which of the following can be used in accounting for spoilage?

When normal spoilage is detected, the work-in-process control account is debited in a job costing system.

What is the direct material cost assigned to good units completed when spoilage units are recognized?

Material left over when making a product is referred to as

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

Quantitative Analyses of Cost Functions

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

Cost Management: Quality, Time, and the Theory of Constraints

Inventory Cost Management Strategies

Capital Budgeting: Methods of Investment Analysis

Capital Budgeting: a Closer Look

Transfer Pricing and Multinational Management Control Systems

Multinational Performance Measurement and Compensation

Filters

Exam 18: Spoilage, Rework, and Scrap

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

An item classified as spoilage has no value.

The costs from Abnormal Spoilage should appear

What is the effect of the following journal entry?

What amounts are allocated to ending work-in-process inventory assuming spoilage units are recognized, and that they are ignored, respectively?

The standard-costing method

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

Explain the meaning of the terms spoilage, scrap, and rework. Provide an example of each. Is it possible for a single firm to have all three from a single productive process?

What is the cost transferred out assuming spoilage units are ignored?

What are the objectives in accounting for spoilage?

The costs of normal spoilage are assigned to individual jobs in process costing, and in job costing.

Which of the following can be used in accounting for spoilage?

When normal spoilage is detected, the work-in-process control account is debited in a job costing system.

What is the direct material cost assigned to good units completed when spoilage units are recognized?

Material left over when making a product is referred to as

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

Quantitative Analyses of Cost Functions

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

Cost Management: Quality, Time, and the Theory of Constraints

Inventory Cost Management Strategies

Capital Budgeting: Methods of Investment Analysis

Capital Budgeting: a Closer Look

Transfer Pricing and Multinational Management Control Systems

Multinational Performance Measurement and Compensation

Filters