Exam 18: Spoilage, rework, and Scrap

Under the weighted-average method,the costs of normal spoilage are added to the costs of their related good units.Hence,the cost per good unit completed and transferred out equals the total costs transferred out divided by the number of good units produced.

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

What is the advantage and disadvantage of early inspections?

Which of the following statement is true of costs of normal and abnormal spoilage?

Which of the following describes rework?

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.Inspection occurs when units are 60% converted.Spoiled units generally constitute 6% of the good units.Data for December 2017 are as follows: Costs for December: What is the number of total spoiled units?

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 in production during the month.Work-in-process records revealed that 12,000 card units were started in January,6000 card units were complete,and 4000 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 assigned to good units completed? (Please round interim calculations to the nearest cent,and final calculations to the nearest whole dollar. )

The costs of normal spoilage are typically included as a component of the costs of good units manufactured.

Normal spoilage rates are computed by dividing units of normal spoilage by total good units completed,NOT total actual units started in production.

Early inspections can ________.

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 4% of the good units.Data provided for February 2017 are as follows: Costs: What is the total costs of all the units that were initially in the beginning work-in-process inventory and were subsequently shipped? Take into account the costs related to the completion of the conversion of the units during the month.Use the FIFO method of process costing.(Round any cost per unit calculations to the nearest cent. )

Rework is residual material that results from manufacturing a product and can have either a high or low sales value relative to the product with which it is associated.

Shazam Machines produces numerous types of money change machines.All machines are made in the same production department and many use exactly the same processes.Because customers have such different demands for the machine characteristics,the company uses a job-costing system.Unfortunately,some of the production managers have been upset for the last few months when their jobs were charged with the spoilage that occurred over an entire processing run of several types of machines.Some of the best managers have even threatened to quit unless the accounting system is changed. Required: What recommendations can you suggest to improve the accounting for spoilage?