Exam 18: Spoilage, rework, and Scrap

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 undetectable materials defects.Spoiled units generally constitute 3% of the good units.Data for December 2017 are as follows: Costs for December: What is the total cost per equivalent unit using the weighted-average method of process costing? (Round any cost per unit calculations to the nearest cent. )

If scrap,common to all jobs,is returned to the storeroom,the journal entry is ________.

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 40% converted.Spoiled fillets generally constitute 6% of the good fillets.Data for April 2017 are as follows: Costs for April: What cost is allocated to abnormal spoilage using the weighted-average process-costing method? (Round any cost per unit calculations to the nearest cent. )

Why do firms often conduct multiple inspections?

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 total cost per equivalent unit using the weighted-average method of process costing? (Round any cost per unit calculations to the nearest cent. )

Abnormal spoilage is spoilage that should arise under efficient operating conditions.

Spoilage can be considered either normal or abnormal.

When normal spoilage is common to all jobs,the budgeted manufacturing overhead rate includes a provision for the normal spoilage cost.

If scrap is returned to the company's storeroom and inventoried,it should NOT have any value in the accounting records.

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 undetectable materials defects.Spoiled units generally constitute 5% of the good units.Data for December 2017 are as follows: Costs for December: What cost is allocated to abnormal spoilage using the weighted-average process-costing method? (Round any cost per unit calculations to the nearest cent. )

Robolane Incorporated manufactures and distributes small robotic toys.Because most of its orders are via telephone or fax,numerous orders have to be reworked.The average cost of the reworked orders is $12.45: $5 for labor,$5.15 for more materials,and $2.30 for overhead.This ratio of costs holds for the average original order.On a recent day,the shop reworked 80 orders out of 800.The original cost of the 80 orders totaled $2,000.The average cost of all orders is $26.245,including rework,with an average selling price of $35. Required: Prepare the necessary journal entry to record the rework for the day if the shop charges such activities to Robo Department Overhead Control.Prepare journal entries to record all relevant rework charges as well as to transfer the reworked items finished goods to Finished Goods Inventory.

The last step in the five-step procedure for process costing with spoilage is to summarize total costs to account for.

Which of the following defines spoilage?

Distinguish among spoilage,reworked units,and scrap.Give an example of each.

Which of the following entries reflects the original cost assignment to spoiled units before considering rework cost?

Some amounts of spoilage,rework,or scrap are inherent in many production processes.

There is a tradeoff between the speed of production and the normal spoilage rate.

Costs of abnormal spoilage are considered inventoriable and are written off as a period expense.

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

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.