Finco Man
CHAPTER 18
SPOILAGE, REWORK, AND SCRAP
TRUE/FALSE 1. Reducing defects helps to reduce costs, but it does not make the business more competitive. 2. Scrap and rework are considered to be the same thing by managerial accountants. 3. Spoilage can be considered either normal or abnormal. 4. Counting spoiled units as part of output units in a process-costing system usually results in a higher cost per unit. 5. Under the FIFO method, all spoilage costs are assumed to be related to the units completed during this period using the unit costs of the current period. 6. Under standard costing, there is no need to calculate a cost per equivalent unit. 7. Abnormal spoilage costs are not considered inventoriable costs under a job-costing system. 8. Costs are assigned to scrap only if it is normal scrap. MULTIPLE CHOICE 1. Managers often cite reductions in the costs of spoilage as a(n): a. major justification for implementing a just-in-time production system b. measurement of improved output quality c. immaterial item that is not to be tracked d. indication of improvement in the accounting system 2. Material left over when making a product is referred to as: a. reworked units b. spoilage c. scrap d. defective units 3. Costs of normal spoilage are usually accounted for as: a. part of the cost of goods sold b. part of the cost of goods manufactured c. a separate line item in the income statement d. an asset in the balance sheet 4. Companies that attempt to achieve zero defects in the manufacturing process treat spoilage as: a. scrap b. reworked units c. abnormal spoilage d. normal spoilage 5. Recognition of spoiled units when computing output
SPOILAGE, REWORK, AND SCRAP
TRUE/FALSE 1. Reducing defects helps to reduce costs, but it does not make the business more competitive. 2. Scrap and rework are considered to be the same thing by managerial accountants. 3. Spoilage can be considered either normal or abnormal. 4. Counting spoiled units as part of output units in a process-costing system usually results in a higher cost per unit. 5. Under the FIFO method, all spoilage costs are assumed to be related to the units completed during this period using the unit costs of the current period. 6. Under standard costing, there is no need to calculate a cost per equivalent unit. 7. Abnormal spoilage costs are not considered inventoriable costs under a job-costing system. 8. Costs are assigned to scrap only if it is normal scrap. MULTIPLE CHOICE 1. Managers often cite reductions in the costs of spoilage as a(n): a. major justification for implementing a just-in-time production system b. measurement of improved output quality c. immaterial item that is not to be tracked d. indication of improvement in the accounting system 2. Material left over when making a product is referred to as: a. reworked units b. spoilage c. scrap d. defective units 3. Costs of normal spoilage are usually accounted for as: a. part of the cost of goods sold b. part of the cost of goods manufactured c. a separate line item in the income statement d. an asset in the balance sheet 4. Companies that attempt to achieve zero defects in the manufacturing process treat spoilage as: a. scrap b. reworked units c. abnormal spoilage d. normal spoilage 5. Recognition of spoiled units when computing output