Chapter 19

Question 1

Broken silicone wafers or defective cans would be categorized as _______.

Answer 1

Spoilage

Question 2

The difference between normal and abnormal spoilage is that…

Answer 2

Normal spoilage is predictable and is considered an inevitability in the production process. Abnormal spoilage is considered avoidable and controllable.

Question 3

What is an inspection point?

Answer 3

The stage of the production process at which products are examined to determine whether they are acceptable or unacceptable units.

Question 4

What is the Total Spoilage formula?

Answer 4

Total spoilage =
(units in beginning WIP + units started) - (good units completed and transferred out + units in ending WIP)

Question 5

True or False: Total Spoilage includes abnormal spoilage.

Answer 5

True

Total spoilage - normal spoilage would give you the abnormal quanitity.

Question 6

What is the Five-Step Procedure for Process Costing with Spoilage?

Answer 6

Step 1: Summarize the flow of physical units of output
Step 2: Compute the output in terms of equivalent units
Step 3: Summarize the total costs to account for
Step 4: Compute the cost per equivalent unit
Step 5: Assign costs to the units completed, spoiled units, and units in ending work-in-Process Inventory

Question 7

When would you use the “cost of good unit completed and transferred out of the process” formula?

Answer 7

When you are using the weighted average inventory system.

Question 8

True or False: The cost of reworking is considered frequently material and therefore included in cost of goods manufactured.

Answer 8

True

Question 9

True or False: The costs of reworking a normal part would be attributed to direct materials.

Answer 9

False

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.

Question 10

The difference when you have an abnormal rework compared to a normal rework is that _______.

Answer 10

Abnormal reworks are highlighted by being charged to a separate account.

Question 11

What are the two major aspects of accounting for scrap?

Answer 11

Inventory costing, including how it will affect operating income.

Planning and control, includes physical tracking.