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SPOILAGE, REWORKED UNITS, AND SCRAP quention

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THE FOLLOWING INFORMATION APPLIES TO QUESTIONS 50 THROUGH 53.;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 20x3 are as follows;WIP, beginning inventory 3/1/20x3 30,000 units;Direct materials (100% complete);Conversion costs (89.5% complete);Started during March 80,000 units;Completed and transferred out 86,000 units;WIP, ending inventory 3/31/20x3 20,000 units;Direct materials (100% complete);Conversion costs (75% complete);Costs;WIP, beginning inventory;Direct materials $ 70,000;Conversion costs 40,000;Direct materials added 160,000;Conversion costs added 120,000;50. 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;51. 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;52. 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;53. 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. Finished Goods $ 10,560.28;Loss from Spoilage $ 10,560.28;b. Loss from Spoilage $ 5,026.80;Finished Goods $ 5,026.80;c. Finished Goods $327,251.00;Work in Process $327,251.00;d. Finished Goods $401,700.00;Work in Process $401,700.00;54. 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.;55. The inspection point is;a. the stage of the production cycle where products are checked to determine whether they are acceptable or unacceptable units.;b. the point at which costs are allocated between normal and abnormal spoilage.;c. the point at which the calculation of equivalent units is made.;d. none of the above.;56. When spoiled goods have a disposal value, the net cost of the spoilage is computed by;a. deducting disposal value from the costs of the spoiled goods accumulated to the inspection point.;b. adding the costs to complete a salable product to the costs accumulated to the inspection point.;c. calculating the costs incurred to the inspection point.;d. none of the above.;57. The costs of normal spoilage are allocated to the units in ending work-in-process inventory, in addition to completed units;a. if the units in ending inventory have not passed the inspection point.;b. if the units in ending work-in-process inventory have passed the inspection point.;c. if the units in ending work in process inventory are more than 50% complete.;d. if the units in ending work-in-process inventory are less than 50% complete.;58. The Harleysville Manufacturing Shop produces motorcycle parts. Typically, 10 pieces out of a job lot of 1,000 parts are spoiled. Costs are assigned at the inspection point, $50.00 per unit. Spoiled pieces may be disposed of at $10.00 per unit. The spoiled goods must be inventoried appropriately when the normal spoilage is detected. The current job requires the production of 2,500 good parts.;Which of the following journal entries properly reflects the recording of spoiled goods?;a. Materials Control $ 200;Manufacturing Overhead Control $ 800;Work-in-Process Control $1,000;b. Materials Control $ 250;Manufacturing Overhead Control $1,000;Work-in-Process Control $1,250;c. Work-in-Process Control $1,250;Materials Control $ 250;Manufacturing Overhead Control $1,000;d. Manufacturing Overhead Control $1,000;Materials Control $ 200;Work-in-Process Control $ 800;59. The Harleysville Manufacturing Shop produces motorcycle parts. Typically, 10 pieces out of a job lot of 1,000 parts are spoiled. Costs are assigned at the inspection point, $50.00 per unit. Spoiled pieces may be disposed of at $10.00 per unit. The spoiled goods must be inventoried appropriately when the normal spoilage is detected. Job 101 requires the production of 2,500 good parts.;Which of the following journal entries would be correct if the spoilage occurred due to specifications required for Job 101?;a. Work-in-Process Control $100;Materials Control $100;b. Materials Control $100;Work-in-Process Control $100;c. Materials Control $250;Work-in-Process Control $250;d. Work-in-Process Control $250;Materials Control $250;60. A difference between job costing and process costing is;a. that job-costing systems usually do not distinguish between normal spoilage attributable to all jobs and normal spoilage attributable to a specific job.;b. that job-costing systems usually distinguish between normal spoilage attributable to a specific job and spoilage common to all jobs.;c. that process costing normally does not distinguish between normal spoilage attributable to a specific job and spoilage common to all jobs.;d. both (b) and (c).;61. Which of the following entries reflects the original cost assignment before production items are reworked?;a. Work-in-Process Control XXX;Materials Control XXX;Wages Payable Control XXX;Manufacturing Overhead Allocated XXX;b. Finished Goods Control XXX;Work-in-Process Control XXX;c. Manufacturing Overhead Allocated XXX;Materials Control XXX;Wages Payable Control XXX;Work-in-Process Control XXX;d. Materials Control XXX;Wages Payable Control XXX;Work-in-Process Control XXX;Manufacturing Overhead Allocated XXX;Answer: a Difficulty: 2 Objective: 7;62. Accounting for rework in a process-costing system;a. accounts for normal rework in the same way as a job-costing system.;b. requires abnormal rework to be distinguished from normal rework.;c. if the rework is normal, then rework is accounted for in the same manner as accounting for normal rework common to all jobs.;d. all of the above are correct.;63. In accounting for scrap, which one of the following statements is FALSE?;a. Normal scrap is accounted for separately from abnormal scrap.;b. In accounting for scrap, there is no distinction between the scrap attributable to a specific job and scrap common to all jobs.;c. Initial entries to scrap accounting records are most often made in dollar terms.;d. All of the above are false.;64. When the amount of scrap is immaterial, the easiest accounting entry when recording scrap sold for cash is;a. Sales of Scrap;Cash;b. Cash;Manufacturing Overhead Control;c. Cash;Sales of Scrap;d. Accounts Receivable;Sales of scrap;65. Assume the amount of scrap is material and the scrap is sold immediately after it is produced. If the scrap attributable to a specific job is sold on account, the journal entry is;a. Work-in-Process Control;Cash;b. Work-in-Process Control;Accounts Receivable;c. Accounts Receivable;Work-in-Process Control;d. Work-in-Process Control;Accounts Receivable;66. If scrap, common to all jobs, is returned to the storeroom and the time between the scrap being inventoried and its disposal is quite lengthy, the journal entry is;a. Work-in-Process Control;Materials Control;b. Materials Control;Work-in-Process Control;c. Manufacturing Overhead Control;Materials Control;d. Materials Control;Manufacturing Overhead Control;67. The accounting for scrap under process costing is similar to;a. the accounting under job costing when scrap is different for each job.;b. the accounting under job costing when scrap is common to all jobs.;c. the accounting under process costing when scrap is different for each job.;d. the accounting under process costing when scrap is a common to all jobs.;68. Which of the following is NOT a major consideration when accounting for scrap?;a. Keeping detailed records of physical quantities of scrap at all stages of the production process;b. Inventory costing including when and how scrap affects operating income;c. Planning and control including physical tracking;d. Decisions as to whether to group scrap with reworked units;69. Normal spoilage is 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. none of the above.;70. Which of the following INCORRECTLY reflects what units passed inspection this period? Assume beginning work in process was completed and ending work in process was started during the period.;Inspection Point at Completion Level;10% 50% 100%;a. Beginning work in process (30% complete) No Yes Yes;b. Started and completed Yes Yes Yes;c. Ending work in process (40% complete) Yes No No;d. Beginning work in process (5% complete) Yes No No

 

Paper#24546 | Written in 18-Jul-2015

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