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SPOILAGE, REWORKED UNITS, AND SCRAP questions

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Question;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.

 

Paper#53549 | Written in 18-Jul-2015

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