ACCT361 Chapter 18
5) Costs incurred due to spoilage in a job order costing system, may be treated in all of the following ways, EXCEPT A) added to abnormal spoilage and written off. B) added to the total cost of that particular job. C) allocated equally to all units at an inspection point. D) added to all jobs through manufacturing overhead. E) allocated between normal and abnormal spoilage.
C
5) If normal spoilage is presumed to occur prior to a specific inspection point, and abnormal spoilage is detected at other inspection points, A) unit costs of abnormal spoilage will differ from the unit cost of normal spoilage. B) all spoilage will be recognized proportionately across the various inspection points. C) abnormal spoilage will generally be less than normal spoilage. D) normal spoilage costs may be allocated prior to inspection of the products and abnormal spoilage will be allocated after the inspection of the products. E) unit cost of abnormal spoilage will be the same as unit costs of normal spoilage.
A
12) The goal of separately identifying abnormal spoilage is to A) properly cost units in the system. B) assist in performance measurement. C) ensure that such units do not reach finished goods inventory. D) reduce abnormal spoilage to an acceptable level. E) reduce abnormal spoilage to nil.
B
13) If the inspection point occurs at 33% into the production cycle, which of the following units would be allocated costs of spoilage detected at inspection? A) all units in the system B) units that are under 33% complete C) units detected to be spoiled units D) units that are more than 33% complete E) units that are under 33% complete, and units detected to be spoiled units
B
14) Sales of scrap may be traced to the individual jobs in which it occurred when the ________ system is used. A) budgeted costing B) job-costing C) process costing D) revenue costing E) weighted-average costing
B
16) When scrap is returned to the storeroom, so that it may be used as direct material, which account is debited? A) work-in-process-control B) materials control C) manufacturing overhead control D) scrap inventory E) sales of scrap
B
20) Costs of normal spoilage are usually accounted for as A) part of the cost of goods sold. B) part of the cost of goods manufactured. C) a separate line item in the income statement. D) an asset in the balance sheet. E) a liability in the balance sheet
B
5) The standard-costing method A) adds a layer of complexity to the calculation of equivalent-unit costs in a process-costing environment. B) makes calculating equivalent-unit costs unnecessary. C) requires an analysis of the spoilage costs in beginning inventory. D) requires an analysis of the spoilage costs in ending inventory. E) requires a calculation of the cost allocation rate.
B
4) Spoilage issues arise in accounting for process costing but not in accounting for job costing.
F
5) An item classified as spoilage has no value.
F
5) Scrap has no value (or minimal value) therefore it is not traced back to specific jobs.
F
6) Reworked goods are unacceptable units of production usually not capable of being repaired or converted into a salable product.
F
7) When calculating normal spoilage rates, the base should be the actual units started in production.
F
8) Abnormal spoilage is spoilage that should arise under efficient operating conditions.
F
14) Units of production that can be reprocessed and then be sold as finished goods are best known as A) reworked units. B) scrap. C) normal spoilage. D) work-in-process. E) abnormal spoilage.
A
15) Which account is debited when scrap is reused as direct material? A) work-in-process-control B) materials control C) manufacturing overhead control D) scrap inventory E) manufacturing overhead allocated
A
18) Normal spoilage rates for a manufacturing process should be computed on the basis of A) total good units. B) total actual units. C) total reworked units. D) total production units. E) total actual units minus total reworked units.
A
6) Normal spoilage is usually computed on the basis of A) the number of good units that pass inspection during the current period. B) the number of units that pass the inspection point during the current period. C) the number of units that are 100% complete as to materials. D) the number of spoiled units that pass inspection during the current period. E) the percentage of good units that passed inspection in the previous period.
A
16) The costs from Abnormal Spoilage should appear A) on the balance sheet as part of finished goods inventory. B) as a separate inventory item. C) as a detailed item on the income statement. D) as part of cost of goods manufactured. E) either on the balance sheet as part of finished goods inventory, or as a separate inventory item.
C
19) Spoilage that should not arise under efficient operating conditions is referred to as A) ordinary spoilage. B) normal spoilage. C) abnormal spoilage. D) uncontrollable E) standard spoilage
C
1) An example of rework is when a shoe manufacturer uses leftover leather from shoes to make leather watch bands.
F
1) Scrap products may be reprocessed and subsequently sold as a finished good.
F
1) Spoilage can be attributed to a particular job in a process costing system.
F
3) Normal spoilage is avoidable and controllable.
F
1) Costs in beginning inventory are pooled with costs in the current period when determining the costs of good units under the weighted-average method of process costing.
T
1) Under standard costing, there is no need to calculate a cost per equivalent unit.
T
2) Accounting for rework in process-costing only requires that abnormal rework be distinguished from normal rework.
T
2) All spoilage costs are related to the units completed during the period using the unit costs of the current period under FIFO.
T
2) Process costing is simplified when using standard costs.
T
3) The calculation of equivalent units under standard costing is the same as under FIFO.
T
11) Total cost per equivalent unit using the weighted-average method equals A) the cost per equivalent unit of direct materials plus cost per spoiled unit. B) the cost per equivalent unit of conversion costs plus cost per unit of spoiled materials. C) the total costs divided by total equivalent units. D) the cost per equivalent unit of direct materials plus the cost per equivalent unit of conversion costs. E) the cost per equivalent unit of indirect materials plus cost per spoiled unit.
D
12) Costs of spoilage include all of the following EXCEPT A) the opportunity cost of the plant and workers. B) storage. C) lost contribution margin. D) the contribution margin gained on rework. E) all costs incurred to make the spoiled product to date.
D
10) Under efficient operating conditions, all spoilage is considered to be abnormal spoilage.
F
2) The costs of normal spoilage are assigned to individual jobs in process costing, and in job costing.
F
3) When normal spoilage is detected, the work-in-process control account is debited in a job costing system.
F
13) Under the FIFO method, all spoilage costs are assumed to be A) related to the units in beginning inventory, plus the units completed during the period. B) related to the units completed during the period. C) related to the units in ending inventory. D) related to the units in both beginning and ending inventory plus the units completed during the period. E) related to the units completed in both beginning and ending inventory.
B
13) When scrap is insignificant in value, A) it is recorded when discovered. B) it may not be recognized until the point of sale. C) it is recognized at the point of production. D) it is recorded at its fair market value. E) it is not necessary to recognize it in the accounting records.
B
15) Items with minimal sales value are known as A) reworked units. B) scrap. C) spoilage. D) ending work in process units. E) abnormal spoilage.
B
11) Deducting the disposal value from the costs of the spoiled goods accumulated to the point of inspection equals A) the net cost of discarded goods. B) the net cost of reworked goods. C) the net cost of spoilage. D) the net cost of scrap. E) the net cost of disposals.
C
21) Material left over when making a product is referred to as A) reworked units. B) spoilage. C) scrap. D) defective units. E) indirect material.
C
17) Companies that attempt to achieve zero defects in the manufacturing process treat all spoilage as which of the following? A) scrap B) reworked units C) normal spoilage D) abnormal spoilage E) production costs added to inventory
D
6) What is the effect of the following journal entry? DR materials control 280 DR manufacturing overhead control 320 CR work-in-process control (job #219) 600 A) $320 of spoilage is attributed to job #219 B) $280 of spoilage is attributed to job #219 C) $600 of spoilage is attributed to job #219 D) $320 of spoilage is attributed to all jobs evenly E) $280 of spoilage is attributed to all jobs evenly
D
11) Which of the following is NOT a consideration when accounting for scrap? A) possibility of theft B) inventory costing C) planning and control includes physical tracking D) decisions as to whether to group scrap with reworked units E) to assist in measuring efficiency
E
4) Which of the following can be used in accounting for spoilage? A) standard costs B) FIFO C) Weighted average D) FIFO and weighted average but not standard costs E) FIFO and weighted average and standard costs
E
7) Which of the following statements is FALSE? A) The cost of spoiled units is the costs incurred prior to detection. B) The unit costs of abnormal and normal spoilage are the same if detected simultaneously. C) the timing of inspection affects the amount of abnormal spoilage. D) Spoilage may occur at points other than the inspection point. E) Spoilage units cannot be sold.
E
2) The costs of abnormal spoilage are written off as a loss; however, the costs of normal spoilage are treated as part of cost of goods manufactured.
T
3) One of the major aspects of accounting for scrap is inventory costing, which includes when and how scrap affects operating income.
T
3) 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.
T
4) In job costing, costs of abnormal spoilage are not considered as inventoriable costs and are therefore written off as costs of the period in which detection occurs.
T
4) The unit costs of abnormal and normal spoilage are equal, when the two are detected simultaneously.
T
4) There is no cost attached to scrap.
T
9) A company whose goal is zero defects would usually treat all spoilage as abnormal.
T
