Question : 5) If normal spoilage presumed to occur prior to a : 1186115

 

5) If normal spoilage is presumed to occur prior to a specific inspection point, and abnormal spoilage is detected at other inspection points,

A) unit costs of abnormal spoilage will differ from the unit cost of normal spoilage.

B) all spoilage will be recognized proportionately across the various inspection points.

C) abnormal spoilage will generally be less than normal spoilage.

D) normal spoilage costs may be allocated prior to inspection of the products and abnormal spoilage will be allocated after the inspection of the products.

E) unit cost of abnormal spoilage will be the same as unit costs of normal spoilage.

 

6) Normal spoilage is usually computed on the basis of

A) the number of good units that pass inspection during the current period.

B) the number of units that pass the inspection point during the current period.

C) the number of units that are 100% complete as to materials.

D) the number of spoiled units that pass inspection during the current period.

E) the percentage of good units that passed inspection in the previous period.

 

7) Which of the following statements is FALSE?

A) The cost of spoiled units is the costs incurred prior to detection.

B) The unit costs of abnormal and normal spoilage are the same if detected simultaneously.

C) the timing of inspection affects the amount of abnormal spoilage.

D) Spoilage may occur at points other than the inspection point.

E) Spoilage units cannot be sold.

 

Use the information below to answer the following question(s).

 

Craft Concept manufactures small tables in its Processing Department. Direct Materials are added at the initiation of the production cycle and must be bundled in single kits for each unit. Conversion costs are incurred evenly throughout the production cycle. Before inspection, some units are spoiled due to non-detectable materials defects. Inspection occurs at the end of the process. Spoiled units generally constitute 5 percent of the good units. Data for December are as follows:

 

WIP, Beginning inventory Dec 1

10,000 units

   Direct materials: 100% complete

 

   Conversion costs: 75% complete

 

 

 

Started during December

40,000 units

 

 

Completed and Transferred Out during month

38,400 units

 

 

WIP, Ending inventory December 31

8,000 units

Direct materials: 100% complete

 

Conversion costs: 65% complete

 

 

 

Costs:

 

WIP, Beginning Inventory:

 

   Direct materials

$50,000

   Conversion costs

30,000

Direct materials added during December

100,000

Conversion costs added during December

140,000

 

8) What is the total cost per equivalent unit using the weighted-average method of process costing?

A) $3.00

B) $3.60

C) $4.60

D) $6.60

E) $6.90

 

9) What cost is allocated to abnormal spoilage using the weighted-average process costing method?

A) $0

B) $7,360

C) $11,088

D) $16,400

E) $18,100

10) What are the amounts of direct materials and conversion costs assigned to ending work in process using the weighted-average process costing method?

A) $18,720; $24,000

B) $22,900; $19,820

C) $24,000; $18,720

D) $28,560; $14,160

E) $33,650; $14,140

 

11) Total cost per equivalent unit using the weighted-average method equals

A) the cost per equivalent unit of direct materials plus cost per spoiled unit.

B) the cost per equivalent unit of conversion costs plus cost per unit of spoiled materials.

C) the total costs divided by total equivalent units.

D) the cost per equivalent unit of direct materials plus the cost per equivalent unit of conversion costs.

E) the cost per equivalent unit of indirect materials plus cost per spoiled unit.

 

12) The goal of separately identifying abnormal spoilage is to

A) properly cost units in the system.

B) assist in performance measurement.

C) ensure that such units do not reach finished goods inventory.

D) reduce abnormal spoilage to an acceptable level.

E) reduce abnormal spoilage to nil.

 

13) Under the FIFO method, all spoilage costs are assumed to be

A) related to the units in beginning inventory, plus the units completed during the period.

B) related to the units completed during the period.

C) related to the units in ending inventory.

D) related to the units in both beginning and ending inventory plus the units completed during the period.

E) related to the units completed in both beginning and ending inventory.

Use the information below to answer the following question(s).

 

Cartwright Custom Carpentry manufactures chairs in its Processing Department, and uses the FIFO cost flow assumption. Direct Materials are included at the inception of the production cycle and must be bundled in single kits for each unit. Conversion costs are incurred evenly throughout the production cycle. Inspection takes place at the end of the process, and spoiled units generally constitute 3 percent of the good output. Information provided for March is as follows:

 

WIP, Beginning inventory March 1

30,000 units

   Direct materials: 100% complete

 

   Conversion costs: 89.5% complete

 

 

 

Started during March

80,000 units

 

 

Completed & Transferred Out

86,000 units

 

 

WIP, Ending inventory March 31

20,000 units

   Direct materials: 100% complete

 

   Conversion costs: 75% complete

 

 

 

Costs:

 

WIP, Beginning Inventory:

 

   Direct materials

$70,000

   Conversion costs

40,000

Direct materials added

160,000

Conversion costs added

120,000

 

14) What are the normal and abnormal spoilage units, respectively, for March?

A) 2,580 units; 1,420 units

B) 1,950 units; 1,390 units

C) 1,690 units; 1,050 units

D) 1,420 units; 2,580 units

E) 1,140 units; 1,140 units