Exam 18: Spoilage, rework, and Scrap

Which of the following is true of unit costs of normal and abnormal spoilage when they are detected at the same inspection point?

The first step in the five-step procedure for process costing with spoilage is to compute the output in terms of equivalent units.

To recognize the disposal value of normal spoilage,________.

The downside to conducting inspections at too early a stage is that units spoiled at later stages of the process may go undetected.

Springfield Sign Shop manufactures only specific orders.It uses a standard cost system.During one large order for the airport 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.

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

Costs of normal spoilage are usually accounted for as ________.

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 of $301,000 were used during the month.Work-in-process records revealed that 11,000 card units were started in January,5500 card units were complete,and 5400 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 amount allocated to the work-in-process ending inventory? (Round any cost per unit calculations to the nearest cent. )

Which of the following statements is true of scrap?

How does inspecting at various stages of completion affect the amount of normal and 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 5% of the good units.Data provided for February 2017 are as follows: Costs: What costs are allocated to the ending work-in-process inventory for direct materials and conversion costs,respectively,using the FIFO method of process costing? (Round any cost per unit calculations to the nearest cent. )

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 undetectable material defects.Spoiled units generally constitute 4% of the good units.Data provided for March 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. )

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 undetectable material defects.Spoiled units generally constitute 5% of the good units.Data provided for March 2017 are as follows: Costs: What costs are allocated to the ending work-in-process inventory for direct materials and conversion costs,respectively,using the FIFO method of process costing? (Round any cost per unit calculations to the nearest cent. )

Assume the following: WIP,beginning 4500 units (100% complete as to direct materials,40% complete as to conversion costs) Started 12,500 units during the period Total spoilage is 800 with normal spoilage is calculated to be 350 units Completed and transferred out during the period 10,000 units WIP,ending 6200 units (100% complete as to direct materials,50% complete as to conversion costs) Spoiled units 800 and inspection happens when the process is 30% complete All materials are added at the start of the process Under the weighted average method,would would be the equivalent units of work done for the period?

Based on the following information from a company's process costing system that is reporting on the month of May's activity in one of its departments,which journal entries would be correct? Loss from Abnormal Spoilage $9000

What is the distinction between normal and abnormal spoilage?

The loss from abnormal spoilage account would appear ________.

Abnormal spoilage is spoilage inherent in a particular production process.

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: Abnormal spoilage totals ________.

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. Required: Prepare a production cost worksheet using weighted-average for the assembly department>