19.7 accounting for scrap

Question 1

residual material that results from manufacturing a product; it has low total sales value compared with the total sales value of the product

Answer 1

scrap

Question 2

is there a distinction between normal and abnormal scrap

Answer 2

no bc no cost is assigned to scrap

Question 3

2 aspects of accounting for scrap

Answer 3

1. planning and control, including physical tracking
2. inventory costing, including when and how scrap affects operating income

Question 4

2 ways of accounting scrap

Answer 4

1. scrap attributable to a specific job
2. scrap common to all jobs

Question 5

scrap attributable to a specific job
no cost is assigned to scrap, so no distinction between normal and abnormal scrap.
all scrap revenues are credited to

Answer 5

the specific job
scrap revenues reduce the costs of the job

Question 6

scrap common to all jobs
expected scrap revenues _____ budgeted manufacturing overhead costs and the budgeted manufacturing overhead rate used to allocate manufacturing overhad costs to the job

Answer 6

reduce

Question 7

you can recognize scrap when

Answer 7

1. at the time of its sale
2. at the time of its production

Question 8

recognizing scrap at the time of its production
in these situations the company assigns an inventory cost to scrap at a a conservative estimate of its _____ to recognize production costs and related scrap revenues in the same accounting period

Answer 8

NRV