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SPOILAGE, REWORKED UNITS, AND SCRAP true false

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Question;1. Reducing;defects helps to reduce costs, but does not make the business more competitive.;2. Reworked;goods are unacceptable units of production usually not capable of being;repaired or converted into a salable product.;3. The;value of scrap material can have either a high or low sales value relative to;the product with which it is associated.;4. Normal;spoilage adds to the cost of the job to which it is attributed in a job order;costing system.;5. When;calculating normal spoilage rates, the base should be actual units started in;production.;6. Abnormal;spoilage is spoilage that should arise under efficient operating conditions.;7. A;company whose goal is zero defects would usually treat all spoilage as;abnormal.;8. Counting;spoiled units as part of output units in a process-costing system usually;results in a higher cost per unit.;9. 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.;10. 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.;11. Under;the FIFO method, all spoilage costs are assumed to be related to units;completed during this period using the unit costs of the current period.;12. 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..;13. Normal;spoilage costs are usually deducted from the costs of good units.;14. Costs;of abnormal spoilage are separately accounted for as losses of the period.;15. In;job costing, costs of abnormal spoilage are not considered as inventoriable;costs and are therefore written off as costs of the period in which detection;occurs.;16. In;both job costing and process costing, normal spoilage attributable to a;specific job is assigned to that job.;17. When;rework is normal and not attributable to any specific job, the costs of rework;are charged to manufacturing overhead, and spread through overhead allocation;over all jobs.;18. Scrap;is usually divided between normal and abnormal scrap.;19. If;scrap is returned to the company's storeroom and thus inventoried, it should;not have any value in the accounting records.;20. Many;companies track scrap only in nonfinancial terms (liters, for example) and;record its sale as another revenue item.

 

Paper#53468 | Written in 18-Jul-2015

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