Question : Objective 18.5 1) The Peric Manufacturing Shop produces motorcycle parts. Typically, : 1211905

Objective 18.5

1) The Peric Manufacturing Shop produces motorcycle parts. Typically, 12 pieces out of a job lot of 1,000 parts are spoiled. Costs are assigned at the inspection point, $40.00 per unit. Spoiled pieces may be disposed at $8.00 per unit. The spoiled goods must be inventoried appropriately when the normal spoilage is detected. The current job requires the production of 3,000 good parts.

Which of the following journal entries properly reflects the recording of spoiled goods?

A) Materials Control200

Manufacturing Overhead Control1,000

Work-in-Process Control1,200

B) Materials Control288

Manufacturing Overhead Control1,152

Work-in-Process Control1,440

C) Work-in-Process Control1,440

Materials Control288

Manufacturing Overhead Control1,152

D) Manufacturing Overhead Control1,200

Materials Control200

Work-in-Process Control1,000

2) The Peric Manufacturing Shop produces motorcycle parts. Typically, 12 pieces out of a job lot of 1,000 parts are spoiled. Costs are assigned at the inspection point, $40.00 per unit. Spoiled pieces may be disposed at $8.00 per unit. The spoiled goods must be inventoried appropriately when the normal spoilage is detected. The current job requires the production of 3,000 good parts.

Which of the following journal entries would be correct if the spoilage occurred due to specifications required for Job 101?

A) Work-in-Process Control96

Materials Control96

B) Materials Control96

Work-in-Process Control96

C) Materials Control288

Work-in-Process Control288

D) Work-in-Process Control288

Materials Control288

3) Which of the following is a journal entry to recognize the disposal value?

A) Materials ControlXXX

Work-in-Process ControlXXX

Manufacturing Overhead ControlXXX

B) Work-in-Process ControlXXX

Manufacturing Overhead ControlXXX

Materials ControlXXX

C) Manufacturing Overhead ControlXXX

Work-in-Process Control XXX

D) Materials ControlXXX

Work-in-Process ControlXXX

4) To recognize the disposal value of normal spoilage, ________.

A) Manufacturing Overhead Control account is debited with spoiled goods at current net disposal value.

B) Materials Control account is debited with spoiled goods at current net disposal value.

C) Work-in-Process Control account is debited with spoiled goods at current net disposal value.

D) Manufacturing Overhead Control account is credited with spoiled goods at current net disposal value.

5) Which of the following sentences is true of classification of spoilage as normal or abnormal when inventories are present?

A) Classifying spoilage as normal rather than abnormal results in same current operating income.

B) Classifying spoilage as normal rather than abnormal results in an decrease in current operating income.

C) Classifying spoilage as abnormal rather than normal results in an increase in current operating income.

D) Classifying spoilage as normal rather than abnormal results in an increase in current operating income.

6) Which of the following sentences is true of normal spoilage and abnormal spoilage?

A) Normal spoilage costs are inventoriable and are added to the cost of good units produced, while abnormal spoilage costs are deducted from the cost of good units produced.

B) Abnormal spoilage costs are inventoriable and are deducted from the cost of good units produced, while normal spoilage costs are expensed in the accounting period in which they occur.

C) Abnormal spoilage costs are inventoriable and are added to the cost of good units produced, while normal spoilage costs are expensed in the accounting period in which they occur.

D) Normal spoilage costs are inventoriable and are deducted from the cost of good units produced, while abnormal spoilage costs are expensed in the accounting period in which they occur.

7) Costs of abnormal spoilage are NOT considered to be inventoriable costs and are written off as costs of the accounting period in which the abnormal spoilage is detected.

8) When assigning costs, job-costing systems generally distinguish normal spoilage attributable to a specific job from normal spoilage common to all jobs.

9) In job-costing systems, abnormal spoilage costs  are considered to be inventoriable costs and normal spoilage costs are not considered to be inventoriable costs and are written off as costs of the accounting period in which the abnormal spoilage is detected.

10) When  normal spoilage is common to all jobs, the budgeted manufacturing overhead rate includes a provision for the normal spoilage cost.