Question;78. Weather;Instruments assembles products from component parts. It has two departments;that process all products. During January, the beginning work in process in the;assembly department was half complete as to conversion and complete as to;direct materials. The beginning inventory included $12,000 for materials and;$4,000 for conversion costs. Overhead is applied at the rate of 50% of direct;manufacturing labor costs. Ending work-in-process inventory in the assembly;department was 40% complete. All spoilage is considered normal and is detected;at the end of the process.;Beginning;work in process in the finishing department was 75% complete as to conversion and;ending work in process was 25% converted. Direct materials are added at the end;of the process. Beginning inventories included $16,000 for transferred-in costs;and $10,000 for direct manufacturing labor costs. Overhead in this department;is equal to direct manufacturing labor costs. Additional information about the;two departments follows;Assembly Finishing;Beginning;work-in-process units 20,000 24,000;Units;started this period 40,000?;Units;transferred this period 50,000 54,000;Ending;work-in-process units 8,000 20,000;Material;costs added $44,000 $28,000;Direct;manufacturing labor $16,000 $24,000;Required;Prepare;a production cost worksheet using weighted-average for the assembly department;and FIFO for the finishing department.;78. Answer;78.;79. Valentine;Florists operate a flower shop. Because most of their orders are via telephone;or fax, numerous orders have to be reworked. The average cost of the reworked;orders is $6: $3.75 for labor, $1.50 for more flowers, and $0.75 for overhead.;This ratio of costs holds for the average original order. On a recent day, the;shop reworked 48 orders out of 249. The original cost of the 48 orders totaled;$720. The average cost of all orders is $18.75, including rework, with an;average selling price of $30;Required;Prepare;the necessary journal entry to record the rework for the day if the shop;charges such activities to Arrangement Department Overhead Control. Prepare a;journal entry to transfer the finished goods to Finished Goods Inventory.;80. Springfield;Sign Shop manufactures only specific orders. It uses a standard cost system.;During one large order for the airport authority, an unusual number of signs;were spoiled. The normal spoilage rate is 10% of units started. The point of;first inspection is half way through the process, the second is three-fourths through;the process, and the final inspection is at the end of the process. Other;information about the job is as follows;Signs;started 3,000;Signs;spoiled 450;Direct;materials put into process at beginning $ 60,000;Conversion;costs for job $120,000;Standard;direct material costs per sign $27;Standard;conversion cost per sign $54;Average;point of spoilage is the 3/4 completion point;Average;current disposal cost per spoiled sign $15;Required;Make;necessary journal entries to record all spoilage.;CRITICAL;THINKING;81. Busy;Hands Craft Company is a small manufacturing company that specializes in arts;and crafts items. It recently bought an old textile mill that it has;refurbished to manufacture and dye special cloth to be sold in its craft shops.;However, it discovered something new for its accounting system. The company;never before had finished goods that did not meet standard, leftover materials;from processing runs, or unacceptable outputs.;Required;As;the business consultant for the company, explain how it can handle the items;mentioned. Include any potential problems with the accounting procedures.;82. You;are the chief financial officer of a lumber mill, and are becoming quite;concerned about the spoilage, scrap, and reworked items associated with your;production processes. Your firm produces mainly products for the building;industry.;Required;Discuss;the problems associated with these items, and the methods your company can use;to reduce spoilage, scrap, and reworked items.;83. Harriet has been reviewing the accounting;system for her company and is very concerned about the accounting for spoilage.;It appears that spoilage is accounted for only at the end of the processing;cycle. While this concept is acceptable in general, Harriet believes that a;better method can be found to properly account for the spoilage when it occurs.;She believes that there must be something better than the weighted-average;method of accounting for spoilage. She would like the company to use a method;that provides closer tracking of the spoilage with the accounting for the;spoilage.;Required;Discuss;the problems Harriet is having with the accounting system.;2;84. Shazam;Machines produces numerous types of money change machines. All machines are;made in the same production department and many use exactly the same processes.;Because customers have such different demands for the machine characteristics;the company uses a job-costing system. Unfortunately, some of the production;managers have been upset for the last few months when their jobs were charged;with the spoilage that occurred over an entire processing run of several types;of machines. Some of the best managers have even threatened to quit unless the;accounting system is changed.;Required;What;recommendations can you suggest to improve the accounting for spoilage?;85. For;each of the following (actual real-world examples) develop products that can be;sold from the listed scrap.;a. The Federal Reserve Banks destroy old;money. Burning this money is usually forbidden under the environmental laws of;most municipalities.;b. A manufacturer of cotton undergarments for;female prisoners has much cotton left over. The manufacturer is located in a;very rural area of Alabama.;c. A hog renderer that has hog bristles as a;result of the slaughtering process.
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