Exam 18: Spoilage, rework, and Scrap

Spoilage always occurs at beginning stages of a production process and can be detected only at the end of process.

Firms often conduct multiple inspections to avoid instances of undetected spoiled units at later stages of the process.

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

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

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

Companies calculate the units of abnormal spoilage and record the cost in the Loss from Abnormal Spoilage account,which appears as a separate line item in an income statement.

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

Scrap is usually divided between normal and abnormal scrap.

An item classified as spoilage has no value.

Normal spoilage costs are usually deducted from the costs of good units.

Which of the following sentences is true of classification of spoilage as normal or abnormal when inventories are present?

Units spoiled due to machine breakdowns and operator errors are normal spoilage.

Under the FIFO method,all spoilage costs are assumed to be related to the units completed during this period using the unit costs of the current period.

Costs of abnormal spoilage are usually accounted for as ________.

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 undetectable defects.Spoiled fillets generally constitute 4% of the good fillets.Data for April 2017 are as follows: Costs for April: What is the amount of direct materials and conversion costs assigned to ending work in process using the weighted-average process-costing method? (Round any cost per unit calculations to the nearest cent. )

Excluding spoiled units in the equivalent-unit calculation results in ________.

Recognizing the value of scrap in the accounting records is always done at the time the scrap is produced.

Costs of abnormal spoilage are separately accounted for as losses of the period.

When the amount of scrap is material and the scrap is sold immediately after it is produced,which of the following is the journal entry if the scrap attributable to a specific job is sold on account?

Spoilage that is not inherent in a particular production process and would not arise under efficient operating conditions is referred to as ________.