EXERCISES AND PROBLEMS;71. Distinguish among spoilage, reworked units, and scrap. Give an example of each.;Answer;72. For each of the following items identify whether it is spoilage, reworked units, or scrap.;a. Defective jeans sold as seconds;b. Shavings;c. Edges from plastic moldings;d. Carpets sold as seconds;e. Precision tools that are not built successfully to the necessary tolerance, but can be successfully converted to a saleable product;f. Rock extracted as a result of mining processing;g. Complex defective products such as semiconductors;73. What are the objectives in accounting for spoilage?;74. The Clay Shop 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 $310,000 for the month. Work-in-process records revealed that 5,000 tons were started in April and that 3,000 tons were finished, 1,000 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?;2;75. 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 shoes 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?;76. 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 20,000 units;Units started 40,000 units;Units completed 50,000 units;Ending work in process 8,000 units;Spoilage 2,000 units;Beginning work-in-process direct materials $12,000;Beginning work-in-process conversion $ 4,000;Direct materials added during month $60,000;Direct manufacturing labor during month $20,000;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.;76. (continued);Assignment of costs;Costs transferred out (50,000 x $1.80) $ 90,000;Normal spoilage (2,000 x $1.80) 3,600;Work in process, ending;Direct materials (8,000 x $1.20) 9,600;Conversion (8,000 x $0.60 x 0.60) 2,880;Costs accounted for $106,080;(Differences may be due to rounding);Difficulty: 2 Objective: 3;77. New Image Sports uses a process-costing system. For March, the company had the following activities;Beginning work-in-process inventory (1/3 complete) 6,000 units;Units placed in production 24,000 units;Good units completed 18,000 units;Ending work-in-process inventory 10,000 units;Cost of beginning work in process $ 5,000;Direct material costs, current $18,000;Conversion costs, current $13,800;Direct materials are placed into production at the beginning of the process. All spoilage is normal and is detected at the end of the process. Ending WIP is 50% completed as to conversion.;Required;Prepare a production cost worksheet using the FIFO method.;77.
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