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SPOILAGE, REWORKED UNITS, AND SCRAP quention

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Question;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#53548 | Written in 18-Jul-2015

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