Exam 18: Spoilage, rework, and Scrap

How can a company account for scrap? Include in your explanation a discussion of the two aspects of accounting for scrap.

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

The inspection point is the ________.

Silver Spoon Incorporated is a manufacturer of kitchen utensils.It produces all of its products in one department.The information for the current month is as follows: Beginning work in process was 25% complete as to conversion.Direct materials are added at the beginning of the process.Factory overhead is applied at a rate equal to 40% of direct manufacturing labor.Ending work in process was 60% complete.All spoilage is normal and is detected at the end of the process. Required: Prepare a production cost worksheet if spoilage is recognized and the weighted-average method is used.

Which of the following statements is true of an abnormal spoilage?

Samantha's Office Supplies manufactures desk organizers 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 undetectable material defects.Spoiled units generally constitute 3% of the good units.Data provided for February 2017 are as follows: Costs: What costs would be associated with normal and abnormal spoilage,respectively,using the FIFO method of process costing? (Round any cost per unit calculations to the nearest cent. )

Which of the following is true of the calculation of the cost per good unit (a unit that is completed and transferred out)under the weighted-average process costing method?

Which of the following statements is true of normal spoilage?

When the amount of scrap is immaterial,which of the following is the easiest accounting entry when recording scrap sold for cash?

All accounting systems must assume that the inspection point occurs when a process is 100% complete.

The Peric Manufacturing Shop produces motorcycle parts.Typically,22 pieces out of a job lot of 1800 parts are spoiled.Spoilage is considered a normal part of Peric's production process.Costs are assigned at the inspection point,$52.00 per unit.Spoiled pieces may be disposed at $16.00 per unit.The spoiled goods must be inventoried appropriately when the normal spoilage is detected.The current job requires the production of 3600 good parts. Which of the following journal entries properly reflects the recording of spoiled goods?

Which of the following is an example of scrap?

A leather shoe manufacturer makes "duck" boots that consist of leather and rubber.Some of the books are defective and are sold in the factory store at deep discounts.Leather strips from the cutting process and rubber shavings are byproducts of the process.The leather strips have no use and are discarded while the rubber scraps are collected and periodically picked up by a recycling company at no cost to the shoe manufacturer.Which of the following classifications of these items would be accurate?

How do job-costing systems account for spoilage?

When spoiled goods have a disposal value,the net cost of the spoilage is computed by ________.

Dynalia Florists operate a flower shop.Because most of their orders are via telephone or fax,numerous orders have to be reworked.The average cost of the reworked orders is $5.25: $3.50 for labor,$1.25 for more flowers,and $0.50 for overhead.This ratio of costs holds for the average original order.On a recent day,the shop reworked 40 orders out of 250.The original cost of the 40 orders totaled $700.The average cost of all orders is $18.34,including rework,with an average selling price of $25. Required: Prepare the necessary journal entry 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.

There is no difference between scrap which can be sold for relatively small amount and a byproduct.

Identify the appropriate order of the following steps in the procedure for process costing with spoilage. a.summarize total costs to account for b.assign total costs to units completed,to spoiled units,and to units in ending inventory c.summarize the flow of physical units d.compute output in terms of equivalent units e.compute cost per equivalent unit

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.Inspection occurs when units are 45% converted.Spoiled fillets generally constitute 6% of the good fillets.Data for April 2017 are as follows: Costs for April: What is the number of total spoiled units?

In job-costing systems,abnormal spoilage costs are considered to be inventoriable costs and normal spoilage costs are not considered to be inventoriable costs and are written off as costs of the accounting period in which the abnormal spoilage is detected.