Deck 18: Spoilage, Rework, and Scrap

Question 1

Material left over when making a product is referred to as:

A)reworked units
B)spoilage
C)scrap
D)defective units

Answer 1

C

Question 2

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

A)ordinary spoilage
B)normal spoilage
C)abnormal spoilage
D)None of these answers is correct.

Answer 2

B

Question 3

An item classified as spoilage has no value.

Answer 3

False

Question 4

A production process which involves spoilage and rework occurs in:

A)the manufacture of high precision tools
B)semiconductor units
C)the manufacture of clothing
D)All of these answers are correct.

Question 5

Scrap 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 6

Costs of abnormal 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

Question 7

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

Question 8

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

Question 9

Normal spoilage should be computed using as the base the:

A)total units completed
B)total good units completed
C)total actual units started into production
D)None of these answers is correct.

Question 10

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

Question 11

Unacceptable units of production that are subsequently repaired and sold as acceptable finished goods are:

A)reworked units
B)spoilage
C)scrap
D)defective units

Question 12

Managers often cite reductions in the costs of spoilage as a(n):

A)major justification for implementing a just-in-time production system
B)measurement of improved output quality
C)immaterial item that is not to be tracked
D)indication of improvement in the accounting system

Question 13

Spoilage that should NOT arise under efficient operating conditions is referred to as:

A)ordinary spoilage
B)normal spoilage
C)abnormal spoilage
D)None of these answers is correct.

Question 14

Unacceptable units of production that are discarded or sold for reduced prices are referred to as:

A)reworked units
B)spoilage
C)scrap
D)defective units

Question 15

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

Question 16

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

Question 17

Costs of poor quality production include the:

A)opportunity cost of the plant and workers
B)effect on current customers
C)effect on potential customers
D)All of these answers are correct.

Question 18

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

Question 19

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

Question 20

The loss from abnormal spoilage account would appear:

A)on the balance sheet
B)as a detailed item in the retained earnings schedule of the balance sheet
C)as a detailed item on the income statement
D)Either A or B is correct.

Question 21

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

Question 22

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

Question 23

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

Question 24

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

Question 25

Abnormal spoilage is spoilage inherent in a particular production process.

Question 26

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

Question 27

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

Question 28

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 the income statement.

Question 29

Answer the following questions using the information below:
Triboro 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 $200,000 during the month. Work-in-process records revealed that 8,000 card units were started in January, 4,000 card units were complete, and 3,000 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 cost transferred out assuming spoilage units are ignored?

A)$175,000
B)$160,000
C)$100,000
D)$155,000

Question 30

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

Question 31

Recognition of spoiled units when computing output units:

A)highlights the costs of normal spoilage to management
B)distorts the accounting data
C)focuses management's attention on reducing spoilage
D)Both A and C are correct.

Question 32

Spoilage can be considered either normal or abnormal.

Question 33

The Joe's Pottery manufactures pottery products. All direct materials are included at the inception of the production process. For April, there was no beginning inventory in the processing plant. Direct materials totaled $155,000 for the month. Work-in-process records revealed that 2,500 tons were started in April and that 1,500 tons were finished; 500 tons were spoiled as expected. Ending work-in-process units are complete in respect to direct materials costs. Spoilage is not detected until the process is complete.
Required:
a. What is the cost per equivalent unit if spoiled units are recognized or ignored?
b. What are the costs assigned to completed units when spoilage units are recognized or when they are not recognized?
c. What are the costs transferred out if spoilage units are recognized or ignored?
d. What are the amounts allocated to the work-in-process ending inventory when spoilage units are recognized or ignored?

Question 34

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

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

Question 35

A company might consider all spoilage to be abnormal if it wants to pay serious attention to the problem.

Question 36

Answer the following questions using the information below:
Triboro 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 $200,000 during the month. Work-in-process records revealed that 8,000 card units were started in January, 4,000 card units were complete, and 3,000 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 when spoilage units are recognized?

A)$100,000
B)$200,000
C)$160,000
D)$175,000

Question 37

Answer the following questions using the information below:
Triboro 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 $200,000 during the month. Work-in-process records revealed that 8,000 card units were started in January, 4,000 card units were complete, and 3,000 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 are the amounts allocated to the work-in-process ending inventory assuming spoilage units are recognized and ignored, respectively?

A)$40,000; $49,000
B)$60,000; $68,500
C)$25,000; $40,000
D)$75,000; $80,000

Question 38

What are the objectives in accounting for spoilage?

Question 39

NOT counting 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)Both A and C are correct.

Question 40

Answer the following questions using the information below:
Triboro 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 $200,000 during the month. Work-in-process records revealed that 8,000 card units were started in January, 4,000 card units were complete, and 3,000 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 are the respective direct material costs per equivalent unit, assuming spoiled units are recognized or ignored?

A)$20.00; $35.00
B)$25.00; $40.00
C)$30.00; $45.00
D)$35.00; $50.00

Question 41

Answer the following questions using the information below:
Triboro 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 $200,000 during the month. Work-in-process records revealed that 8,000 card units were started in January, 4,000 card units were complete, and 3,000 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.
Spoilage costs allocated to ending work in process are larger by which method and by how much?

A)when spoiled units are recognized, by $5,000
B)when spoiled units are recognized, by $8,500
C)when spoiled units are ignored, by $15,000
D)when spoiled units are recognized, by $15,000

Question 42

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

Question 43

Answer the following questions using the information below:
Craft 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 5% of the good units. Data for December 2012 are as follows:
Costs for December:

Abnormal spoilage totals:

A)3,200 units
B)4,000 units
C)3,360 units
D)3,840 units

Question 44

Answer the following questions using the information below:
Craft 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 5% of the good units. Data for December 2012 are as follows:
Costs for December:

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

A)$ 0
B)$ 14,720
C)$22,176
D)$32,800

Question 45

Answer the following questions using the information below:
Craft 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 5% of the good units. Data for December 2012 are as follows:
Costs for December:

Normal spoilage totals:

A)3,200 units
B)4,000 units
C)3,840 units
D)5,400 units

Question 46

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 3.5% of the good fillets. Data for April 2012 are as follows:
Costs for April:

Normal spoilage totals:

A)7,000 units
B)0 units
C)16,000 units
D)14,000 units

Question 47

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 4% of the good units. Data provided for February 2012 are as follows:
Costs:

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

A)2,800 units; 2,960 units
B)6,560 units; 3,280 units
C)6,480 units; 15,520 units
D)6,480 units; 22,000 units

Question 48

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 3.5% of the good fillets. Data for April 2012 are as follows:
Costs for April:

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

A)$6,720; $27,840
B)$27,840 $6,720
C)$27,840; $33,600
D)$33,600; $27,840

Question 49

Answer the following questions using the information below:
Cartwright 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 3% of the good units. Data provided for March 20X5 are as follows:
Costs:

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

A)2,580 units; 1,420 units
B)1,950 units; 1,390 units
C)1,690 units; 1,050 units
D)1,420 units; 2,000 units

Question 50

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 3.5% of the good fillets. Data for April 2012 are as follows:
Costs for April:

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

A)$4.00
B)$1.74
C)$2.10
D)$3.84

Question 51

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 3.5% of the good fillets. Data for April 2012 are as follows:
Costs for April:

What is the number of total spoiled units?

A) 16,000 units
B) 10,000 units
C) 50,000 units
D)14,000 units

Question 52

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 3.5% of the good fillets. Data for April 2012 are as follows:
Costs for April:

Abnormal spoilage totals:

A)7,000 units
B)0 units
C)16,000 units
D)14,000 units

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 3.5% of the good fillets. Data for April 2012 are as follows:
Costs for April:

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)None of these answers is correct.

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 3.5% of the good fillets. Data for April 2012 are as follows:
Costs for April:

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

A)$ 0
B)$26,880
C)$53,760
D)$29,000

Question 55

Answer the following questions using the information below:
Craft 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 5% of the good units. Data for December 2012 are as follows:
Costs for December:

What are the amounts 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)$45,800; $39,640
C)$48,000; $37,440
D)$57,120; $28,320

Question 56

Answer the following questions using the information below:
Cartwright 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 3% of the good units. Data provided for March 20X5 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?

A)$38,250; $24,850
B)$40,000; $23,100
C)$40,000; $21,590
D)$49,500; $13,600

Question 57

Answer the following questions using the information below:
Cartwright 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 3% of the good units. Data provided for March 20X5 are as follows:
Costs:

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

A)$5,890.64; $9,133.20
B)$5,890.64; $5,826.00
C)$6,469.64; $7,690.36
D)$9,133.20; $5,026.80

Question 58

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 3.5% of the good fillets. Data for April 2012 are as follows:
Costs for April:

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 59

Answer the following questions using the information below:
Craft 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 5% of the good units. Data for December 2012 are as follows:
Costs for December:

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

A)$3.00
B)$3.60
C)$6.60
D)$4.60

Question 60

Answer the following questions using the information below:
Craft 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 5% of the good units. Data for December 2012 are as follows:
Costs for December:

What is the number of total spoiled units?

A)13,200 units
B)4,000 units
C)5,400 units
D)7,200 units

Question 61

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 4% of the good units. Data provided for February 2012 are as follows:
Costs:

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

A)$25,142; $60,216
B)$60,216; $25,142
C)$2,514; $6,020
D)$16,000; $8,000

Question 62

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

Question 63

Viking Sports is a manufacturer of sportswear. It produces all of its products in one department. The information for the current month is as follows:
Beginning work in process was half complete as to conversion. Direct materials are added at the beginning of the process. Factory overhead is applied at a rate equal to 50% of direct manufacturing labor. Ending work in process was 60% complete. All spoilage is normal and is detected at end of the process.
Required:
Prepare a production cost worksheet if spoilage is recognized and the weighted-average method is used.

Question 64

Endicott Shoes manufactures shoes. All direct materials are included at the inception of the production process. For March, there were 1,400 units in beginning inventory with a direct material cost of $700. Direct materials totaled $15,000 for the month. Work-in-process records revealed that 35,000 units were started in March and that 30,000 were finished. Normal spoilage of 2% of units finished was incurred. Ending work-in-process units are complete in respect to direct materials costs. Spoilage is not detected until the process is complete. Endicott uses the weighted-average method.
Required:
a. What are the direct materials costs assigned to completed good units when spoilage units are recognized or when they are ignored?
b. What are the direct material amounts allocated to the work-in-process ending inventory when spoilage units are recognized or ignored?

Question 65

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

Question 66

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

Question 67

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

Question 68

Identify the appropriate order of the following steps in the procedure for process costing with spoilage.
a. summarize total costs to account for
b. assign total costs to units completed, to spoiled units, and to units in ending inventory
c. summarize the flow of physical units
d. compute output in terms of equivalent units
e. compute cost per equivalent unit
Step 2 ________

Question 69

Normal spoilage costs are usually deducted from the costs of good units.

Question 70

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 4% of the good units. Data provided for February 2012 are as follows:
Costs:

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; $33,000
C)$80,000; $43,180
D)$99.000; $27,200

Question 71

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

Question 72

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

Question 73

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 74

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 4% of the good units. Data provided for February 2012 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?

A)$76,500; $9,700
B)$80,000; $46,200
C)$76,800; $9,900
D)$99,000; $76,800

Question 75

When spoiled goods have a disposal value, the net cost of spoilage is computed by adding the disposal value to the costs of the spoiled goods accumulated to the inspection point.

Question 76

To simplify calculations under FIFO, spoiled units are accounted for as if they were started in the current period.

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 4% of the good units. Data provided for February 2012 are as follows:
Costs:

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)$434,560
C)$636,320
D)$307,000

Question 78

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 4% of the good units. Data provided for February 2012 are as follows:
Costs:

What are 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)$388,000
B)$33,000
C)$421,000
D)$ 194,000

Question 79

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 80

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.