Deck 18: Spoilage, rework, and Scrap

Question 1

The loss from abnormal spoilage account would appear ________.

A) on a balance sheet
B) as a detailed item in the retained earnings schedule of a balance sheet
C) a separate line item on an income statement
D) a deduction from the cost of goods sold

Answer 1

C

Question 2

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

Answer 2

False

Question 3

Spoilage refers to ________.

A) units of production that do not meet the specifications required by customers but that are subsequently repaired and sold as good finished units
B) units of production whether fully or partially completed, that do not meet the specifications required by customers for good units and are discarded or sold at reduced prices
C) residual material that results from manufacturing a product
D) products of a joint production process that have low total sales values relative to the total sales value of the main product

Answer 3

B

Question 4

Spoilage that is not inherent in a particular production process and would not arise under efficient operating conditions is referred to as ________.

A) incremental spoilage
B) usual spoilage
C) abnormal spoilage
D) indirect spoilage

Question 5

Reworked goods are unacceptable units of production usually NOT capable of being repaired or converted into a salable product.

Question 6

Costs of normal spoilage are usually accounted for as ________.

A) a deduction from the cost of goods sold
B) a component of the costs of good units manufactured
C) a "loss from normal spoilage account" in income statement
D) a liability on a balance sheet

Question 7

Scrap and rework are considered to be the same thing by managerial accountants.

Question 8

Scrap is ________.

A) units of production that do not meet the specifications required by customers but that are subsequently repaired and sold as good finished units
B) products of a joint production process that have low total sales values relative to the total sales value of the main product
C) residual material that results from manufacturing a product
D) units of production whether fully or partially completed, that do not meet the specifications required by customers for good units and are discarded or sold at reduced prices

Question 9

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

Question 10

Rework is finished production that is NOT in accordance with customer desires.The product is redone and sold as finished goods.

Question 11

Costs of abnormal spoilage are usually accounted for as ________.

A) a deduction from the cost of goods sold
B) a component of the costs of good units manufactured
C) a separate line item in an income statement
D) an asset on a balance sheet

Question 12

Which of the following is an example of spoilage?

A) short lengths from woodworking operations
B) edges from plastic molding operations
C) defective units of laptops detected after the production process but reworked before the units are sold as good products to customers
D) defective aluminum cans sold to aluminum manufacturers for remelting to produce other aluminum products

Question 13

For each of the following items identify whether it is spoilage,reworked units,or scrap.

Question 14

Spoilage that is an inherent result of the particular production process and arises even under efficient operating conditions is referred to as ________.

A) incremental spoilage
B) normal spoilage
C) irregular spoilage
D) direct spoilage

Question 15

An item classified as spoilage has no value.

Question 16

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.

Question 17

A production process which involves spoilage and rework occurs in ________.

A) the manufacture of high precision machine tools
B) the manufacture of semiconductor units
C) the manufacture of clothing
D) the mining industry

Question 18

Which of the following is an example of scrap?

A) short lengths from woodworking operations
B) defective units of laptops detected after the production process but reworked before the units are sold as good products to customers
C) defective aluminum cans sold to aluminum manufacturers for remelting to produce other aluminum products
D) defective shirts, jeans, shoes, and carpeting sold as seconds

Question 19

Rework refers to ________.

A) units of production that do not meet the specifications required by customers but that are subsequently repaired and sold as good finished units
B) products of a joint production process that have low total sales values relative to the total sales value of the main product
C) units of production whether fully or partially completed, that do not meet the specifications required by customers for good units and are discarded or sold at reduced prices
D) residual material that results from manufacturing a product

Question 20

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

Question 21

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

Question 22

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

A) scrap
B) reworked units
C) abnormal spoilage
D) indirect spoilage

Question 23

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

Question 24

Line operators and other plant personnel generally can decrease or eliminate normal spoilage by identifying the reasons for machine breakdowns,operator errors.

Question 25

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

Question 26

Abnormal spoilage is spoilage inherent in a particular production process.

Question 27

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

Question 28

Spoilage can be considered either normal or abnormal.

Question 29

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

Question 30

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

A) It is a spoilage which is inherent in a particular production process.
B) It arises even when the process is carried out in an efficient manner.
C) It is usually regarded as avoidable and controllable.
D) The costs of abnormal spoilage are typically included as a component of the costs of good units manufactured.

Question 31

Which of the following statements is true of normal spoilage and abnormal spoilage?

A) Normal spoilage is inherent in a particular production process, whereas abnormal spoilage is not inherent in a particular production process.
B) Abnormal spoilage arises even when the process is carried out in an efficient manner, whereas normal spoilage does not arise when the process is carried out in an efficient manner.
C) Normal spoilage is usually regarded as avoidable and controllable, whereas abnormal spoilage is unavoidable and uncontrollable.
D) The costs of normal spoilage are recorded as a loss as a separate line item in an income statement, whereas costs of abnormal spoilage are included as a component of the costs of good units manufactured.

Question 32

Normal spoilage is usually regarded as avoidable and controllable.

Question 33

Which of the following statements is true of normal spoilage?

A) It is a spoilage which is not inherent in a particular production process.
B) It occurs due to machine breakdowns and operator errors.
C) It is usually regarded as avoidable and controllable.
D) It arises even when the process is carried out in an efficient manner.

Question 34

Normal spoilage is spoilage that is NOT considered to be inherent in a production process.

Question 35

Units spoiled due to machine breakdowns and operator errors are normal spoilage.

Question 36

Costs of abnormal spoilage are separately accounted for as losses of the period.

Question 37

Normal spoilage rates are computed by ________.

A) dividing the units of normal spoilage by total actual units started into production
B) dividing the units of normal spoilage by total good units completed
C) dividing total actual units started into production by the units of normal spoilage
D) dividing total good units completed by the units of normal spoilage

Question 38

Which one of the following conditions usually exists when comparing normal and abnormal spoilage to controllability?
$\begin{array}{ll}\text { Normal Spoilage } &\text { Abnormal Spoilage }\\\end{array}$

A) $\begin{array}{ll}\text { Controllable } & \text { Controllable } \\\end{array}$
B) $\begin{array}{ll}\text { Controllable } & \text { Uncontrollable } \\\end{array}$
C) $\begin{array}{ll}\text { Uncontrollable } & \text { Uncontrollable } \\\end{array}$
D) $\begin{array}{ll}\text { Uncontrollable } & \text { Controllable }\end{array}$

Question 39

Under efficient operating conditions,all spoilage is considered to be abnormal spoilage.

Question 40

Companies calculate the units of abnormal spoilage and record the cost in the Loss from Abnormal Spoilage account,which appears as a separate line item in an income statement.

Question 41

Answer the following questions using the information below:
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 nondetectible defects. Inspection occurs when units are 50% converted. Spoiled fillets generally constitute 4% of the good fillets. Data for April 2015 are as follows:
$\begin{array} { l } \text {WIP, beginuing inventory 4/1/2015 }& \text { 85,000 fillets} \\ \text {Direct materials (100\% complete) }\\ \text {Conversion costs ( \( 50 \% \) complete) }\\\text { Started during April } & 130,000 \text { fillets } \\\text { Completed and transferred out } 4 / 31 / 2015 & 180,000 \text { fillets } \\\text { WIP, ending inventory } 4 / 31 / 2015 & 22,000 \text { fillets }\\ \text {Direct materials ( \( 100 \% \) complete) }&\\ \text { Conversion costs ( \( 20 \% \) complete) }\\\\\text { Costs for April: }\\\text { WIP, beginuning Inventory: }\\ \text { Direct materials } & \$ 130,000 \\\text { Conversion costs } & 95,910 \\\text { Direct materials added } & 300,000 \\\text { Conversion costs added } & 383,130\end{array}$


-What is the total cost per equivalent unit using the weighted-average method of process costing?

A) $4.00
B) $2.40
C) $2.00
D) $4.40

Question 42

The cost per good unit in the weighted-average method is equal to the ________.

A) total cost of direct materials and conversion costs per equivalent unit, plus a share of normal spoilage
B) sum of the costs per equivalent unit of direct materials and conversion costs
C) total costs divided by total equivalent units
D) total costs transferred out divided by total abnormal spoilage

Question 43

The inspection point is the ________.

A) stage of the production cycle where products are checked to determine whether they are acceptable or unacceptable units
B) point at which costs are allocated between normal and abnormal spoilage
C) point at which the calculation of equivalent units is made
D) stage of allocating total costs transferred out to good units completed and transferred

Question 44

Answer the following questions using the information below:
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 nondetectible materials defects. Inspection occurs when units are 50% converted. Spoiled units generally constitute 4% of the good units. Data for December 2015 are as follows:
$\begin{array}{ll}\text { WIP, beginuing inventory } 12 / 1 / 2015&22,000 \text { units }\\\text { Direct materials ( } 100 \% \text { complete) }\\\text { Conversion costs ( } 75 \% \text { complete) }\\\text { Started during December } & 76,000 \text { units } \\\text { Completed and transferred out } 12 / 31 / 2015 & 72,000 \text { units } \\\text { WIP, ending inventory } 12 / 31 / 2015 & 18,000 \text { units }\\\text { Direct materials ( } 100 \% \text { complete) }\\\text { Conversion costs ( } 65 \% \text { complete) }\\\\\text { Costs for December: }\\\text { WIP, beginuning Inventory: }\\\text { Direct materials } & \$ 150,000 \\\text { Conversion costs } & 76,800 \\\text { Direct materials added } & 222,400 \\\text { Conversion costs added } & 290,000\end{array}$

-What is the amount of direct materials and conversion costs assigned to ending work in process using the weighted-average process-costing method?

A) $37,440; $48,000
B) $72,000; $44,460
C) $68,400; $46,800
D) $67,120; $44,320

Question 45

Answer the following questions using the information below:
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 nondetectible materials defects. Inspection occurs when units are 50% converted. Spoiled units generally constitute 4% of the good units. Data for December 2015 are as follows:
$\begin{array}{ll}\text { WIP, beginuing inventory } 12 / 1 / 2015&22,000 \text { units }\\\text { Direct materials ( } 100 \% \text { complete) }\\\text { Conversion costs ( } 75 \% \text { complete) }\\\text { Started during December } & 76,000 \text { units } \\\text { Completed and transferred out } 12 / 31 / 2015 & 72,000 \text { units } \\\text { WIP, ending inventory } 12 / 31 / 2015 & 18,000 \text { units }\\\text { Direct materials ( } 100 \% \text { complete) }\\\text { Conversion costs ( } 65 \% \text { complete) }\\\\\text { Costs for December: }\\\text { WIP, beginuning Inventory: }\\\text { Direct materials } & \$ 150,000 \\\text { Conversion costs } & 76,800 \\\text { Direct materials added } & 222,400 \\\text { Conversion costs added } & 290,000\end{array}$

-Normal spoilage totals ________.

A) 3,200 units
B) 8,000 units
C) 2,880 units
D) 5,120 units

Question 46

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 purchases totaled $300,000 during the month. Work-in-process records revealed that 10,000 card units were started in January, 5,000 card units were complete, and 4,000 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?

A) $150,000
B) $250,000
C) $120,000
D) $270,000

Question 47

Answer the following questions using the information below:
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 nondetectible defects. Inspection occurs when units are 50% converted. Spoiled fillets generally constitute 4% of the good fillets. Data for April 2015 are as follows:
$\begin{array} { l } \text {WIP, beginuing inventory 4/1/2015 }& \text { 85,000 fillets} \\ \text {Direct materials (100\% complete) }\\ \text {Conversion costs ( \( 50 \% \) complete) }\\\text { Started during April } & 130,000 \text { fillets } \\\text { Completed and transferred out } 4 / 31 / 2015 & 180,000 \text { fillets } \\\text { WIP, ending inventory } 4 / 31 / 2015 & 22,000 \text { fillets }\\ \text {Direct materials ( \( 100 \% \) complete) }&\\ \text { Conversion costs ( \( 20 \% \) complete) }\\\\\text { Costs for April: }\\\text { WIP, beginuning Inventory: }\\ \text { Direct materials } & \$ 130,000 \\\text { Conversion costs } & 95,910 \\\text { Direct materials added } & 300,000 \\\text { Conversion costs added } & 383,130\end{array}$


-What cost is allocated to abnormal spoilage using the weighted-average process-costing method?

A) $ 0
B) $25,520
C) $11,600
D) $13,920

Question 48

Answer the following questions using the information below:
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 nondetectible materials defects. Inspection occurs when units are 50% converted. Spoiled units generally constitute 4% of the good units. Data for December 2015 are as follows:
$\begin{array}{ll}\text { WIP, beginuing inventory } 12 / 1 / 2015&22,000 \text { units }\\\text { Direct materials ( } 100 \% \text { complete) }\\\text { Conversion costs ( } 75 \% \text { complete) }\\\text { Started during December } & 76,000 \text { units } \\\text { Completed and transferred out } 12 / 31 / 2015 & 72,000 \text { units } \\\text { WIP, ending inventory } 12 / 31 / 2015 & 18,000 \text { units }\\\text { Direct materials ( } 100 \% \text { complete) }\\\text { Conversion costs ( } 65 \% \text { complete) }\\\\\text { Costs for December: }\\\text { WIP, beginuning Inventory: }\\\text { Direct materials } & \$ 150,000 \\\text { Conversion costs } & 76,800 \\\text { Direct materials added } & 222,400 \\\text { Conversion costs added } & 290,000\end{array}$

-What is the total cost per equivalent unit using the weighted-average method of process costing?

A) $3.80
B) $3.60
C) $7.80
D) $4.00

Question 49

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 purchases totaled $300,000 during the month. Work-in-process records revealed that 10,000 card units were started in January, 5,000 card units were complete, and 4,000 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 per equivalent unit?

A) $20.00
B) $30.00
C) $25.00
D) $35.00

Question 50

Answer the following questions using the information below:
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 nondetectible materials defects. Inspection occurs when units are 50% converted. Spoiled units generally constitute 4% of the good units. Data for December 2015 are as follows:
$\begin{array}{ll}\text { WIP, beginuing inventory } 12 / 1 / 2015&22,000 \text { units }\\\text { Direct materials ( } 100 \% \text { complete) }\\\text { Conversion costs ( } 75 \% \text { complete) }\\\text { Started during December } & 76,000 \text { units } \\\text { Completed and transferred out } 12 / 31 / 2015 & 72,000 \text { units } \\\text { WIP, ending inventory } 12 / 31 / 2015 & 18,000 \text { units }\\\text { Direct materials ( } 100 \% \text { complete) }\\\text { Conversion costs ( } 65 \% \text { complete) }\\\\\text { Costs for December: }\\\text { WIP, beginuning Inventory: }\\\text { Direct materials } & \$ 150,000 \\\text { Conversion costs } & 76,800 \\\text { Direct materials added } & 222,400 \\\text { Conversion costs added } & 290,000\end{array}$

-What cost is allocated to abnormal spoilage using the weighted-average process-costing method?

A) $ 0
B) $14,720
C) $39,936
D) $19,456

Question 51

What are the objectives in accounting for spoilage?

Question 52

What is the distinction between normal and abnormal spoilage?

Question 53

Answer the following questions using the information below:
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 nondetectible defects. Inspection occurs when units are 50% converted. Spoiled fillets generally constitute 4% of the good fillets. Data for April 2015 are as follows:
$\begin{array} { l } \text {WIP, beginuing inventory 4/1/2015 }& \text { 85,000 fillets} \\ \text {Direct materials (100\% complete) }\\ \text {Conversion costs ( \( 50 \% \) complete) }\\\text { Started during April } & 130,000 \text { fillets } \\\text { Completed and transferred out } 4 / 31 / 2015 & 180,000 \text { fillets } \\\text { WIP, ending inventory } 4 / 31 / 2015 & 22,000 \text { fillets }\\ \text {Direct materials ( \( 100 \% \) complete) }&\\ \text { Conversion costs ( \( 20 \% \) complete) }\\\\\text { Costs for April: }\\\text { WIP, beginuning Inventory: }\\ \text { Direct materials } & \$ 130,000 \\\text { Conversion costs } & 95,910 \\\text { Direct materials added } & 300,000 \\\text { Conversion costs added } & 383,130\end{array}$


-Normal spoilage totals ________.

A) 7,200 units
B) 0 units
C) 13,000 units
D) 5,800 units

Question 54

Answer the following questions using the information below:
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 nondetectible defects. Inspection occurs when units are 50% converted. Spoiled fillets generally constitute 4% of the good fillets. Data for April 2015 are as follows:
$\begin{array} { l } \text {WIP, beginuing inventory 4/1/2015 }& \text { 85,000 fillets} \\ \text {Direct materials (100\% complete) }\\ \text {Conversion costs ( \( 50 \% \) complete) }\\\text { Started during April } & 130,000 \text { fillets } \\\text { Completed and transferred out } 4 / 31 / 2015 & 180,000 \text { fillets } \\\text { WIP, ending inventory } 4 / 31 / 2015 & 22,000 \text { fillets }\\ \text {Direct materials ( \( 100 \% \) complete) }&\\ \text { Conversion costs ( \( 20 \% \) complete) }\\\\\text { Costs for April: }\\\text { WIP, beginuning Inventory: }\\ \text { Direct materials } & \$ 130,000 \\\text { Conversion costs } & 95,910 \\\text { Direct materials added } & 300,000 \\\text { Conversion costs added } & 383,130\end{array}$


-What is the number of total spoiled units?

A) 16,000 units
B) 7,000 units
C) 15,000 units
D) 13,000 units

Question 55

Excluding spoiled units in the equivalent-unit calculation results in ________.

A) lower cost per good unit.
B) higher cost per good unit
C) better management information
D) higher cost for spoiled units

Question 56

Answer the following questions using the information below:
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 nondetectible materials defects. Inspection occurs when units are 50% converted. Spoiled units generally constitute 4% of the good units. Data for December 2015 are as follows:
$\begin{array}{ll}\text { WIP, beginuing inventory } 12 / 1 / 2015&22,000 \text { units }\\\text { Direct materials ( } 100 \% \text { complete) }\\\text { Conversion costs ( } 75 \% \text { complete) }\\\text { Started during December } & 76,000 \text { units } \\\text { Completed and transferred out } 12 / 31 / 2015 & 72,000 \text { units } \\\text { WIP, ending inventory } 12 / 31 / 2015 & 18,000 \text { units }\\\text { Direct materials ( } 100 \% \text { complete) }\\\text { Conversion costs ( } 65 \% \text { complete) }\\\\\text { Costs for December: }\\\text { WIP, beginuning Inventory: }\\\text { Direct materials } & \$ 150,000 \\\text { Conversion costs } & 76,800 \\\text { Direct materials added } & 222,400 \\\text { Conversion costs added } & 290,000\end{array}$

-Abnormal spoilage totals ________.

A) 3,200 units
B) 8,000 units
C) 5,120 units
D) 2,880 units

Question 57

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 purchases totaled $300,000 during the month. Work-in-process records revealed that 10,000 card units were started in January, 5,000 card units were complete, and 4,000 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?

A) $40,000
B) $50,000
C) $30,000
D) $75,000

Question 58

Answer the following questions using the information below:
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 nondetectible materials defects. Inspection occurs when units are 50% converted. Spoiled units generally constitute 4% of the good units. Data for December 2015 are as follows:
$\begin{array}{ll}\text { WIP, beginuing inventory } 12 / 1 / 2015&22,000 \text { units }\\\text { Direct materials ( } 100 \% \text { complete) }\\\text { Conversion costs ( } 75 \% \text { complete) }\\\text { Started during December } & 76,000 \text { units } \\\text { Completed and transferred out } 12 / 31 / 2015 & 72,000 \text { units } \\\text { WIP, ending inventory } 12 / 31 / 2015 & 18,000 \text { units }\\\text { Direct materials ( } 100 \% \text { complete) }\\\text { Conversion costs ( } 65 \% \text { complete) }\\\\\text { Costs for December: }\\\text { WIP, beginuning Inventory: }\\\text { Direct materials } & \$ 150,000 \\\text { Conversion costs } & 76,800 \\\text { Direct materials added } & 222,400 \\\text { Conversion costs added } & 290,000\end{array}$

-What is the number of total spoiled units?

A) 10,200 units
B) 2,880 units
C) 5,120 units
D) 8,000 units

Question 59

Answer the following questions using the information below:
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 nondetectible defects. Inspection occurs when units are 50% converted. Spoiled fillets generally constitute 4% of the good fillets. Data for April 2015 are as follows:
$\begin{array} { l } \text {WIP, beginuing inventory 4/1/2015 }& \text { 85,000 fillets} \\ \text {Direct materials (100\% complete) }\\ \text {Conversion costs ( \( 50 \% \) complete) }\\\text { Started during April } & 130,000 \text { fillets } \\\text { Completed and transferred out } 4 / 31 / 2015 & 180,000 \text { fillets } \\\text { WIP, ending inventory } 4 / 31 / 2015 & 22,000 \text { fillets }\\ \text {Direct materials ( \( 100 \% \) complete) }&\\ \text { Conversion costs ( \( 20 \% \) complete) }\\\\\text { Costs for April: }\\\text { WIP, beginuning Inventory: }\\ \text { Direct materials } & \$ 130,000 \\\text { Conversion costs } & 95,910 \\\text { Direct materials added } & 300,000 \\\text { Conversion costs added } & 383,130\end{array}$


-What is the amount of direct materials and conversion costs assigned to ending work in process using the weighted-average process-costing method?

A) $26,720; $25,020
B) $44,000 $15,840
C) $83,600; $88,000
D) $88,000; $25,080

Question 60

Answer the following questions using the information below:
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 nondetectible defects. Inspection occurs when units are 50% converted. Spoiled fillets generally constitute 4% of the good fillets. Data for April 2015 are as follows:
$\begin{array} { l } \text {WIP, beginuing inventory 4/1/2015 }& \text { 85,000 fillets} \\ \text {Direct materials (100\% complete) }\\ \text {Conversion costs ( \( 50 \% \) complete) }\\\text { Started during April } & 130,000 \text { fillets } \\\text { Completed and transferred out } 4 / 31 / 2015 & 180,000 \text { fillets } \\\text { WIP, ending inventory } 4 / 31 / 2015 & 22,000 \text { fillets }\\ \text {Direct materials ( \( 100 \% \) complete) }&\\ \text { Conversion costs ( \( 20 \% \) complete) }\\\\\text { Costs for April: }\\\text { WIP, beginuning Inventory: }\\ \text { Direct materials } & \$ 130,000 \\\text { Conversion costs } & 95,910 \\\text { Direct materials added } & 300,000 \\\text { Conversion costs added } & 383,130\end{array}$


-Abnormal spoilage totals ________.

A) 5,800 units
B) 0 units
C) 7,200 units
D) 13,000 units

Question 61

Under the FIFO method,all spoilage costs are assumed to be related to the units completed during this period using the unit costs of the current period.

Question 62

Answer the following questions using the information below:
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 nondetectible material defects. Spoiled units generally constitute 4% of the good units. Data provided for March 20X5 are as follows:
$\begin{array}{ll}(\text { WIP, beginuing inventory } 3 / 1 / 20 \times 5&32,000 \text { units }\\\text { Direct materials ( } 100 \% \text { complete) }\\\text { Conversion costs ( } 85 \% \text { complete) }\\\\\text { Started during March } & 70,000 \text { units } \\\text { Completed and transferred out } & 80,000 \text { units } \\\\\text { WIP, ending inwentory } 3 / 31 / 20 \times 5 & 18,000 \text { units }\\\text { Direct materials ( } 100 \% \text { complete) }\\\text { Conversion costs ( } 80 \% \text { complete) }\\\\\text { Costs: }\\\text { WIP, beginning inventory: }\\\hline \text { Direct materials } & \$ 70,000 \\\quad \text { Conversion costs } & 40,000 \\\text { Direct materials added } & 105,000 \\\text { Conversion costs added } & 128,160\end{array}$

-What are the normal and abnormal spoilage units,respectively,for March when using FIFO?

A) 3,200 units; 800 units
B) 1,950 units; 1,390 units
C) 3,690 units; 1,850 units
D) 1,420 units; 2,000 units

Question 63

Spoilage is typically assumed to occur at the stage of completion where inspection takes place.

Question 64

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.

Question 65

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.

Question 66

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

Question 67

Answer the following questions using the information below:
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 nondetectible material defects. Spoiled units generally constitute 3% of the good units. Data provided for February 2015 are as follows:
$\begin{array} { l }\text { WIP, beginuing inventory } 2 / 1 / 2015&51,000 \text { units } \\ \text {Direct materials ( \( 100 \% \) complete) }\\ \text {Conversion costs ( \( 50 \% \) complete) }\\\\\text { Started during February } & 170,000 \text { units } \\\text { Completed and transferred out } & 180,000 \text { units } \\\\\text { WIP, ending inventory } 2 / 28 / 2015 & 26,000 \text { units }\\ \text {Direct materials ( \( 100 \% \) complete) }\\ \text { Conversion costs ( \( 25 \% \) complete)}\\\\\text { Costs: }\\\text { WIP, beginning inventory: }\\\text { Direct materials } & \$ 280,000 \\\text { Conversion costs } & 80,000 \\\text { Direct materials added } & 408,000 \\\text { Conversion costs added } & 264,000\end{array}$


-What costs would be associated with normal and abnormal spoilage,respectively,using the FIFO method of process costing?

A) $21,060; $37,440
B) $12,960; $37,440
C) $14,400; $12,960
D) $16,000; $8,000

Question 68

Answer the following questions using the information below:
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 nondetectible material defects. Spoiled units generally constitute 3% of the good units. Data provided for February 2015 are as follows:
$\begin{array} { l }\text { WIP, beginuing inventory } 2 / 1 / 2015&51,000 \text { units } \\ \text {Direct materials ( \( 100 \% \) complete) }\\ \text {Conversion costs ( \( 50 \% \) complete) }\\\\\text { Started during February } & 170,000 \text { units } \\\text { Completed and transferred out } & 180,000 \text { units } \\\\\text { WIP, ending inventory } 2 / 28 / 2015 & 26,000 \text { units }\\ \text {Direct materials ( \( 100 \% \) complete) }\\ \text { Conversion costs ( \( 25 \% \) complete)}\\\\\text { Costs: }\\\text { WIP, beginning inventory: }\\\text { Direct materials } & \$ 280,000 \\\text { Conversion costs } & 80,000 \\\text { Direct materials added } & 408,000 \\\text { Conversion costs added } & 264,000\end{array}$


-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.

A) $38,250
B) $360,000
C) $398,250
D) $194,000

Question 69

Counting spoiled units as part of output units in a process-costing system usually results in a higher cost per unit.

Question 70

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

Question 71

Answer the following questions using the information below:
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 nondetectible material defects. Spoiled units generally constitute 4% of the good units. Data provided for March 20X5 are as follows:
$\begin{array}{ll}(\text { WIP, beginuing inventory } 3 / 1 / 20 \times 5&32,000 \text { units }\\\text { Direct materials ( } 100 \% \text { complete) }\\\text { Conversion costs ( } 85 \% \text { complete) }\\\\\text { Started during March } & 70,000 \text { units } \\\text { Completed and transferred out } & 80,000 \text { units } \\\\\text { WIP, ending inwentory } 3 / 31 / 20 \times 5 & 18,000 \text { units }\\\text { Direct materials ( } 100 \% \text { complete) }\\\text { Conversion costs ( } 80 \% \text { complete) }\\\\\text { Costs: }\\\text { WIP, beginning inventory: }\\\hline \text { Direct materials } & \$ 70,000 \\\quad \text { Conversion costs } & 40,000 \\\text { Direct materials added } & 105,000 \\\text { Conversion costs added } & 128,160\end{array}$

-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?

A) $28,250; $24,850
B) $27,000; $25,920
C) $40,000; $25,590
D) $27,500; $23,600

Question 72

Answer the following questions using the information below:
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 nondetectible material defects. Spoiled units generally constitute 3% of the good units. Data provided for February 2015 are as follows:
$\begin{array} { l }\text { WIP, beginuing inventory } 2 / 1 / 2015&51,000 \text { units } \\ \text {Direct materials ( \( 100 \% \) complete) }\\ \text {Conversion costs ( \( 50 \% \) complete) }\\\\\text { Started during February } & 170,000 \text { units } \\\text { Completed and transferred out } & 180,000 \text { units } \\\\\text { WIP, ending inventory } 2 / 28 / 2015 & 26,000 \text { units }\\ \text {Direct materials ( \( 100 \% \) complete) }\\ \text { Conversion costs ( \( 25 \% \) complete)}\\\\\text { Costs: }\\\text { WIP, beginning inventory: }\\\text { Direct materials } & \$ 280,000 \\\text { Conversion costs } & 80,000 \\\text { Direct materials added } & 408,000 \\\text { Conversion costs added } & 264,000\end{array}$


-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?

A) $66,500; $10,700
B) $60,000; $40,200
C) $62,400; $9,750
D) $39,000; $15,600

Question 73

Under the FIFO method,all spoilage costs are assumed to be related to the units ________.

A) in beginning inventory, plus the units completed during the period
B) completed during the period
C) in ending inventory
D) in both beginning and ending inventory plus the units completed during the period

Question 74

Answer the following questions using the information below:
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 nondetectible material defects. Spoiled units generally constitute 4% of the good units. Data provided for March 20X5 are as follows:
$\begin{array}{ll}(\text { WIP, beginuing inventory } 3 / 1 / 20 \times 5&32,000 \text { units }\\\text { Direct materials ( } 100 \% \text { complete) }\\\text { Conversion costs ( } 85 \% \text { complete) }\\\\\text { Started during March } & 70,000 \text { units } \\\text { Completed and transferred out } & 80,000 \text { units } \\\\\text { WIP, ending inwentory } 3 / 31 / 20 \times 5 & 18,000 \text { units }\\\text { Direct materials ( } 100 \% \text { complete) }\\\text { Conversion costs ( } 80 \% \text { complete) }\\\\\text { Costs: }\\\text { WIP, beginning inventory: }\\\hline \text { Direct materials } & \$ 70,000 \\\quad \text { Conversion costs } & 40,000 \\\text { Direct materials added } & 105,000 \\\text { Conversion costs added } & 128,160\end{array}$

-Which of the following journal entries correctly represents the transfer of completed goods for the current period using the FIFO method of process costing?

A) $\begin{array} { l } \text {Finished Goods } &10,560.28\\ \text {Loss from Spoilage } &10,560.28\\\end{array}$

B) $\begin{array} { l } \text {Loss from Spoilage } &2,640.00\\ \text {Finished Goods } &2,640.00\\\end{array}$

C) $\begin{array} { l } \text {Finished Goods} &287,600.00\\ \text { Work in Process} &287,600.00\\\end{array}$

D) $\begin{array} { l } \text { Finished Goods} &110,000.00\\ \text { Work in Process} &110,000.00\\\end{array}$

Question 75

Answer the following questions using the information below:
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 nondetectible material defects. Spoiled units generally constitute 3% of the good units. Data provided for February 2015 are as follows:
$\begin{array} { l }\text { WIP, beginuing inventory } 2 / 1 / 2015&51,000 \text { units } \\ \text {Direct materials ( \( 100 \% \) complete) }\\ \text {Conversion costs ( \( 50 \% \) complete) }\\\\\text { Started during February } & 170,000 \text { units } \\\text { Completed and transferred out } & 180,000 \text { units } \\\\\text { WIP, ending inventory } 2 / 28 / 2015 & 26,000 \text { units }\\ \text {Direct materials ( \( 100 \% \) complete) }\\ \text { Conversion costs ( \( 25 \% \) complete)}\\\\\text { Costs: }\\\text { WIP, beginning inventory: }\\\text { Direct materials } & \$ 280,000 \\\text { Conversion costs } & 80,000 \\\text { Direct materials added } & 408,000 \\\text { Conversion costs added } & 264,000\end{array}$


-What are the normal and abnormal spoilage units,respectively,for February when using FIFO?

A) 2,800 units; 2,960 units
B) 5,100 units; 3,280 units
C) 5,400 units; 9,600 units
D) 5,400 units; 15,000 units

Question 76

Answer the following questions using the information below:
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 nondetectible material defects. Spoiled units generally constitute 4% of the good units. Data provided for March 20X5 are as follows:
$\begin{array}{ll}(\text { WIP, beginuing inventory } 3 / 1 / 20 \times 5&32,000 \text { units }\\\text { Direct materials ( } 100 \% \text { complete) }\\\text { Conversion costs ( } 85 \% \text { complete) }\\\\\text { Started during March } & 70,000 \text { units } \\\text { Completed and transferred out } & 80,000 \text { units } \\\\\text { WIP, ending inwentory } 3 / 31 / 20 \times 5 & 18,000 \text { units }\\\text { Direct materials ( } 100 \% \text { complete) }\\\text { Conversion costs ( } 80 \% \text { complete) }\\\\\text { Costs: }\\\text { WIP, beginning inventory: }\\\hline \text { Direct materials } & \$ 70,000 \\\quad \text { Conversion costs } & 40,000 \\\text { Direct materials added } & 105,000 \\\text { Conversion costs added } & 128,160\end{array}$

-What costs would be associated with normal and abnormal spoilage,respectively,using the FIFO method of process costing?

A) $5,890; $9,133
B) $1,440; $4,800
C) $4,800; $2,640
D) $10,560; $2,640

Question 77

Answer the following questions using the information below:
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 nondetectible material defects. Spoiled units generally constitute 3% of the good units. Data provided for February 2015 are as follows:
$\begin{array} { l }\text { WIP, beginuing inventory } 2 / 1 / 2015&51,000 \text { units } \\ \text {Direct materials ( \( 100 \% \) complete) }\\ \text {Conversion costs ( \( 50 \% \) complete) }\\\\\text { Started during February } & 170,000 \text { units } \\\text { Completed and transferred out } & 180,000 \text { units } \\\\\text { WIP, ending inventory } 2 / 28 / 2015 & 26,000 \text { units }\\ \text {Direct materials ( \( 100 \% \) complete) }\\ \text { Conversion costs ( \( 25 \% \) complete)}\\\\\text { Costs: }\\\text { WIP, beginning inventory: }\\\text { Direct materials } & \$ 280,000 \\\text { Conversion costs } & 80,000 \\\text { Direct materials added } & 408,000 \\\text { Conversion costs added } & 264,000\end{array}$


-What are the total costs of all the units that were started during February and subsequently shipped before the end of the period?

A) $628,560
B) $503,100
C) $636,320
D) $398,250

Question 78

Which of the following journal entries correctly represents the transfer of completed goods begun during February using the FIFO method of process costing?

A) $\begin{array} { l } \text { Finished Goods}&503,100 \\ \text {Work in Process }&503,100 \\\end{array}$

B) $\begin{array} { l } \text {Loss from Spoilage }&37,440 \\ \text { Finished Goods }&37,440 \\\end{array}$

C) $\begin{array} { l } \text { Finished Goods}& 922,410\\ \text {Work in Process }&922,410 \\\end{array}$

D) $\begin{array} { l } \text { Finished Goods}&398,250 \\ \text {Work in Process }&398,250 \\\end{array}$

Question 79

Spoilage and rework costs are thoroughly captured in the accounting system.

Question 80

Answer the following questions using the information below:
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 nondetectible material defects. Spoiled units generally constitute 3% of the good units. Data provided for February 2015 are as follows:
$\begin{array} { l }\text { WIP, beginuing inventory } 2 / 1 / 2015&51,000 \text { units } \\ \text {Direct materials ( \( 100 \% \) complete) }\\ \text {Conversion costs ( \( 50 \% \) complete) }\\\\\text { Started during February } & 170,000 \text { units } \\\text { Completed and transferred out } & 180,000 \text { units } \\\\\text { WIP, ending inventory } 2 / 28 / 2015 & 26,000 \text { units }\\ \text {Direct materials ( \( 100 \% \) complete) }\\ \text { Conversion costs ( \( 25 \% \) complete)}\\\\\text { Costs: }\\\text { WIP, beginning inventory: }\\\text { Direct materials } & \$ 280,000 \\\text { Conversion costs } & 80,000 \\\text { Direct materials added } & 408,000 \\\text { Conversion costs added } & 264,000\end{array}$


-What are the direct material and conversion 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.

A) $76,500; $49,700
B) $0; $38,250
C) $60,000; $40,200
D) $39,000; $15,600