Question 1

When assigning costs,job-costing systems generally distinguish normal spoilage attributable to a specific job from normal spoilage common to all jobs.

Accepted Answer

A) True 
 B)False

Question 2

Costs are assigned to scrap only if it is abnormal scrap.

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

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 4% of the good fillets. Data for April 2015 are as follows:
 $\begin{array} { l  }
 \text {WIP, beginuing inventory 4/1/2015 }& \text { 85,000 fillets} \ \text {Direct materials (100\% complete) }\ \text {Conversion costs ( $ 50 \% $ complete) }\
\text { Started during April } & 130,000 \text { fillets } \
\text { Completed and transferred out } 4 / 31 / 2015 & 180,000 \text { fillets } \
\text { WIP, ending inventory } 4 / 31 / 2015 & 22,000 \text { fillets }\
 \text {Direct materials ( $ 100 \% $ complete) }&\ \text { Conversion costs ( $ 20 \% $ complete) }\
\\text { Costs for April: }\
\text { WIP, beginuning Inventory: }\
 \text { Direct materials } & \$ 130,000 \
\text { Conversion costs } & 95,910 \
\text { Direct materials added } & 300,000 \
\text { Conversion costs added } & 383,130
\end{array}$

-What is the total cost per equivalent unit using the weighted-average method of process costing?

Accepted Answer

A)  $4.00 
B)  $2.40 
C)  $2.00 
D)  $4.40 
A)  $4.00 
B)  $2.40 
C)  $2.00 
D)  $4.40

Question 5

Weather Instruments assembles products from component parts.It has two departments that process all products.During January,the beginning work in process in the assembly department was half complete as to conversion and complete as to direct materials.The beginning inventory included $12,000 for materials and $4,000 for conversion costs.Overhead is applied at the rate of 50% of direct manufacturing labor costs.Ending work-in-process inventory in the assembly department was 40% complete.All spoilage is considered normal and is detected at the end of the process.
Beginning work in process in the finishing department was 75% complete as to conversion and ending work in process was 25% converted.Direct materials are added at the end of the process.Beginning inventories included $16,000 for transferred-in costs and $10,000 for direct manufacturing labor costs.Overhead in this department is equal to direct manufacturing labor costs.Additional information about the two departments follows:
 $$\begin{array} { l r r } 
& \text { Assembly }& \text { Finishing } \
\text { Beginning Work-in-process units } & 20,000 & 24,000 \
\text { Units started this period } & 40,000 & ? \
\text { Units transferred this period } & 50,000 & 54,000 \
\text { Ending work-in-process units } & 8,000 & 20,000 \
\text { Material costs added } & \$ 44,000 & \$ 28,000 \
\text { Direct manufacturing labor } & \$ 16,000 & \$ 24,000
\end{array}$$ Required:
Prepare a production cost worksheet using weighted-average for the assembly department and FIFO for the finishing department.

Accepted Answer

Normal spoilage in a

Question 6

For each of the following (actual real-world examples),develop products that can be sold from the listed scrap.
a.The Federal Reserve Banks destroy old money.Burning this money is usually forbidden under the environmental laws of most municipalities.
b.A manufacturer of cotton undergarments for prisoners has much cotton left over.The manufacturer is located in a very rural area of Alabama.
c.A hog renderer has hog bristles as a result of the slaughtering process.

Accepted Answer

a.The Federal Reserve Banks bag up the s

Question 7

What are the objectives in accounting for spoilage?

Accepted Answer

The key objectives in accounting for spo

Question 8

You are the chief financial officer of a lumber mill,and you are becoming quite concerned about the spoilage,scrap,and reworked items associated with your production processes.Your firm produces mainly products for the building industry.
Required:
Discuss the problems associated with these items and the methods your company can use to reduce spoilage,scrap,and reworked items.

Accepted Answer

The problems associated with these items

Question 9

Which one of the following conditions usually exists when comparing normal and abnormal spoilage to controllability? 
$\begin{array}{ll}\text { Normal Spoilage } &\text { Abnormal Spoilage }\\end{array}$

Accepted Answer

A) $\begin{array}{ll}\text {  Controllable } & \text { Controllable } \\end{array}$ 
B) $\begin{array}{ll}\text {  Controllable } & \text { Uncontrollable } \\end{array}$ 
C) $\begin{array}{ll}\text {  Uncontrollable } & \text { Uncontrollable } \\end{array}$ 
D) $\begin{array}{ll}\text {  Uncontrollable } & \text { Controllable }
\end{array}$ 
A) $\begin{array}{ll}\text {  Controllable } & \text { Controllable } \\end{array}$ 
B) $\begin{array}{ll}\text {  Controllable } & \text { Uncontrollable } \\end{array}$ 
C) $\begin{array}{ll}\text {  Uncontrollable } & \text { Uncontrollable } \\end{array}$ 
D) $\begin{array}{ll}\text {  Uncontrollable } & \text { Controllable }
\end{array}$

Question 10

Colil Computer Systems, Inc., manufactures printer circuit cards. All direct materials are added at the inception of the production process. During January, the accounting department noted that there was no beginning inventory. Direct materials purchases totaled $300,000 during the month. Work-in-process records revealed that 10,000 card units were started in January, 5,000 card units were complete, and 4,000 card units were spoiled as expected. Ending work-in-process card units are complete in respect to direct materials costs. Spoilage is not detected until the process is complete.
-What is the direct material cost per equivalent unit?

Accepted Answer

A)  $20.00 
B)  $30.00 
C)  $25.00 
D)  $35.00 
A)  $20.00 
B)  $30.00 
C)  $25.00 
D)  $35.00

Question 11

Answer the following questions using the information below:
Verer 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 as units are placed into production. After inspection, some units are spoiled due to nondetectible material defects. Spoiled units generally constitute 4% of the good units. Data provided for March 20X5 are as follows:
 $\begin{array}{ll}
(\text { WIP, beginuing inventory } 3 / 1 / 20 \times 5&32,000 \text { units }\
\text { Direct materials ( } 100 \% \text { complete) }\
\text { Conversion costs ( } 85 \% \text { complete) }\\
\text { Started during March } & 70,000 \text { units } \
\text { Completed and transferred out } & 80,000 \text { units } \\
\text { WIP, ending inwentory } 3 / 31 / 20 \times 5 & 18,000 \text { units }\\text { Direct materials ( } 100 \% \text { complete) }\\text { Conversion costs ( } 80 \% \text { complete) }\\
\text { Costs: }\
\text { WIP, beginning inventory: }\
\hline \text { Direct materials } & \$ 70,000 \
\quad \text { Conversion costs } & 40,000 \
\text { Direct materials added } & 105,000 \
\text { Conversion costs added } & 128,160
\end{array}$
-Which of the following journal entries correctly represents the transfer of completed goods for the current period using the FIFO method of process costing?

Accepted Answer

A)  $\begin{array} { l  }
 \text {Finished Goods } &10,560.28\ \text {Loss from Spoilage } &10,560.28\
\end{array}$ 
B)  $\begin{array} { l  }
 \text {Loss from Spoilage } &2,640.00\ \text {Finished Goods } &2,640.00\
\end{array}$ 
C)  $\begin{array} { l  }
 \text {Finished Goods} &287,600.00\ \text { Work in Process} &287,600.00\
\end{array}$ 
D)  $\begin{array} { l  }
 \text { Finished Goods} &110,000.00\ \text { Work in Process} &110,000.00\
\end{array}$ 
A)  $\begin{array} { l  }
 \text {Finished Goods } &10,560.28\ \text {Loss from Spoilage } &10,560.28\
\end{array}$ 
B)  $\begin{array} { l  }
 \text {Loss from Spoilage } &2,640.00\ \text {Finished Goods } &2,640.00\
\end{array}$ 
C)  $\begin{array} { l  }
 \text {Finished Goods} &287,600.00\ \text { Work in Process} &287,600.00\
\end{array}$ 
D)  $\begin{array} { l  }
 \text { Finished Goods} &110,000.00\ \text { Work in Process} &110,000.00\
\end{array}$

Question 12

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 4% of the good fillets. Data for April 2015 are as follows:
 $\begin{array} { l  }
 \text {WIP, beginuing inventory 4/1/2015 }& \text { 85,000 fillets} \ \text {Direct materials (100\% complete) }\ \text {Conversion costs ( $ 50 \% $ complete) }\
\text { Started during April } & 130,000 \text { fillets } \
\text { Completed and transferred out } 4 / 31 / 2015 & 180,000 \text { fillets } \
\text { WIP, ending inventory } 4 / 31 / 2015 & 22,000 \text { fillets }\
 \text {Direct materials ( $ 100 \% $ complete) }&\ \text { Conversion costs ( $ 20 \% $ complete) }\
\\text { Costs for April: }\
\text { WIP, beginuning Inventory: }\
 \text { Direct materials } & \$ 130,000 \
\text { Conversion costs } & 95,910 \
\text { Direct materials added } & 300,000 \
\text { Conversion costs added } & 383,130
\end{array}$

-Abnormal spoilage totals ________.

Accepted Answer

A)  5,800 units 
B)  0 units 
C)  7,200 units 
D)  13,000 units 
A)  5,800 units 
B)  0 units 
C)  7,200 units 
D)  13,000 units

Question 13

Answer the following questions using the information below:
Outose 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 4% of the good units. Data for December 2015 are as follows:
 $\begin{array}{ll}
\text { WIP, beginuing inventory } 12 / 1 / 2015&22,000 \text { units }\
\text { Direct materials ( } 100 \% \text { complete) }\
\text { Conversion costs ( } 75 \% \text { complete) }\
\text { Started during December } & 76,000 \text { units } \
\text { Completed and transferred out } 12 / 31 / 2015 & 72,000 \text { units } \
\text { WIP, ending inventory } 12 / 31 / 2015 & 18,000 \text { units }\\text { Direct materials ( } 100 \% \text { complete) }\\text { Conversion costs ( } 65 \% \text { complete) }\\\text { Costs for December: }\
\text { WIP, beginuning Inventory: }\\text { Direct materials } & \$ 150,000 \
\text { Conversion costs } & 76,800 \
\text { Direct materials added } & 222,400 \
\text { Conversion costs added } & 290,000
\end{array}$
-Normal spoilage totals ________.

Accepted Answer

A)  3,200 units 
B)  8,000 units 
C)  2,880 units 
D)  5,120 units 
A)  3,200 units 
B)  8,000 units 
C)  2,880 units 
D)  5,120 units

Question 14

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 4% of the good fillets. Data for April 2015 are as follows:
 $\begin{array} { l  }
 \text {WIP, beginuing inventory 4/1/2015 }& \text { 85,000 fillets} \ \text {Direct materials (100\% complete) }\ \text {Conversion costs ( $ 50 \% $ complete) }\
\text { Started during April } & 130,000 \text { fillets } \
\text { Completed and transferred out } 4 / 31 / 2015 & 180,000 \text { fillets } \
\text { WIP, ending inventory } 4 / 31 / 2015 & 22,000 \text { fillets }\
 \text {Direct materials ( $ 100 \% $ complete) }&\ \text { Conversion costs ( $ 20 \% $ complete) }\
\\text { Costs for April: }\
\text { WIP, beginuning Inventory: }\
 \text { Direct materials } & \$ 130,000 \
\text { Conversion costs } & 95,910 \
\text { Direct materials added } & 300,000 \
\text { Conversion costs added } & 383,130
\end{array}$

-What is the number of total spoiled units?

Accepted Answer

A)  16,000 units 
B)  7,000 units 
C)  15,000 units 
D)  13,000 units 
A)  16,000 units 
B)  7,000 units 
C)  15,000 units 
D)  13,000 units

Question 15

Early inspections can ________.

Accepted Answer

A)  prevent any further conversion costs being wasted on units that are already good 
B)  increase conversion costs on units that are already spoiled 
C)  increase any further costs being spent on units that are already spoiled 
D)  prevent any further costs being wasted on units that are already spoiled 
A)  prevent any further conversion costs being wasted on units that are already good 
B)  increase conversion costs on units that are already spoiled 
C)  increase any further costs being spent on units that are already spoiled 
D)  prevent any further costs being wasted on units that are already spoiled

Question 16

In accounting for scrap,which of the following statements is true?

Accepted Answer

A)  Normal scrap is accounted for separately from abnormal scrap. 
B)  In accounting for scrap, there is no distinction between the scrap attributable to a specific job and scrap common to all jobs. 
C)  Initial entries to scrap accounting records are most often made in dollar terms. 
D)  Scrap records not only help measure efficiency, but also help keep track of scrap, and so reduce the chances of theft. 
A)  Normal scrap is accounted for separately from abnormal scrap. 
B)  In accounting for scrap, there is no distinction between the scrap attributable to a specific job and scrap common to all jobs. 
C)  Initial entries to scrap accounting records are most often made in dollar terms. 
D)  Scrap records not only help measure efficiency, but also help keep track of scrap, and so reduce the chances of theft.

Question 17

Maxire Shoes manufactures shoes.All direct materials are included at the inception of the production process.For March,there were 2,800 units in beginning inventory with a direct material cost of $1,400.Direct materials totaled $35,000 for the month.Work-in-process records revealed that 70,000 units were started in March and that 60,000 were finished.Normal spoilage of 2% 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.Endicott uses the weighted-average method.
Required:
a.What are the direct materials costs assigned to completed good units?
b.What are the direct material amounts allocated to the work-in-process ending inventory?

Accepted Answer

The answer of Maxire Shoes manufactures shoes.All direct materials are...

Question 18

Under the FIFO method,all spoilage costs are assumed to be related to the units ________.

Accepted Answer

A)  in beginning inventory, plus the units completed during the period 
B)  completed during the period 
C)  in ending inventory 
D)  in both beginning and ending inventory plus the units completed during the period 
A)  in beginning inventory, plus the units completed during the period 
B)  completed during the period 
C)  in ending inventory 
D)  in both beginning and ending inventory plus the units completed during the period

Question 19

Scrap is ________.

Accepted Answer

A)  units of production that do not meet the specifications required by customers but that are subsequently repaired and sold as good finished units 
B)  products of a joint production process that have low total sales values relative to the total sales value of the main product 
C)  residual material that results from manufacturing a product 
D)  units of production whether fully or partially completed, that do not meet the specifications required by customers for good units and are discarded or sold at reduced prices 
A)  units of production that do not meet the specifications required by customers but that are subsequently repaired and sold as good finished units 
B)  products of a joint production process that have low total sales values relative to the total sales value of the main product 
C)  residual material that results from manufacturing a product 
D)  units of production whether fully or partially completed, that do not meet the specifications required by customers for good units and are discarded or sold at reduced prices

Question 20

Answer the following questions using the information below:
Outose 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 4% of the good units. Data for December 2015 are as follows:
 $\begin{array}{ll}
\text { WIP, beginuing inventory } 12 / 1 / 2015&22,000 \text { units }\
\text { Direct materials ( } 100 \% \text { complete) }\
\text { Conversion costs ( } 75 \% \text { complete) }\
\text { Started during December } & 76,000 \text { units } \
\text { Completed and transferred out } 12 / 31 / 2015 & 72,000 \text { units } \
\text { WIP, ending inventory } 12 / 31 / 2015 & 18,000 \text { units }\\text { Direct materials ( } 100 \% \text { complete) }\\text { Conversion costs ( } 65 \% \text { complete) }\\\text { Costs for December: }\
\text { WIP, beginuning Inventory: }\\text { Direct materials } & \$ 150,000 \
\text { Conversion costs } & 76,800 \
\text { Direct materials added } & 222,400 \
\text { Conversion costs added } & 290,000
\end{array}$
-What is the number of total spoiled units?

Accepted Answer

A)  10,200 units 
B)  2,880 units 
C)  5,120 units 
D)  8,000 units 
A)  10,200 units 
B)  2,880 units 
C)  5,120 units 
D)  8,000 units

When assigning costs,job-costing systems generally distinguish normal spoilage attributable to a specific job from normal spoilage common to all jobs.

Costs are assigned to scrap only if it is abnormal scrap.

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

What are the objectives in accounting for spoilage?

Which one of the following conditions usually exists when comparing normal and abnormal spoilage to controllability? Normal Spoilage Abnormal Spoilage

Early inspections can ________.

In accounting for scrap,which of the following statements is true?

Under the FIFO method,all spoilage costs are assumed to be related to the units ________.

Scrap is ________.

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, direct-Cost Variances, and Management Control

Flexible Budgets, overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy, balanced Scorecard, and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Balanced Scorecard: Quality and Time

Inventory Management, just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, transfer Pricing, and Multinational Considerations

Performance Measurement, compensation, and Multinational Considerations

Filters

Exam 18: Spoilage, rework, and Scrap

When assigning costs,job-costing systems generally distinguish normal spoilage attributable to a specific job from normal spoilage common to all jobs.

Costs are assigned to scrap only if it is abnormal scrap.

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

What are the objectives in accounting for spoilage?

Which one of the following conditions usually exists when comparing normal and abnormal spoilage to controllability? Normal Spoilage Abnormal Spoilage

Early inspections can ________.

In accounting for scrap,which of the following statements is true?

Under the FIFO method,all spoilage costs are assumed to be related to the units ________.

Scrap is ________.

The Manager and Management Accounting

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, direct-Cost Variances, and Management Control

Flexible Budgets, overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Strategy, balanced Scorecard, and Strategic Profitability Analysis

Pricing Decisions and Cost Management

Cost Allocation, customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Balanced Scorecard: Quality and Time

Inventory Management, just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, transfer Pricing, and Multinational Considerations

Performance Measurement, compensation, and Multinational Considerations

Filters