Acct 303 Chapter 18

CHAPTER 18
SPOILAGE, REWORK, AND SCRAP

18-16 (510 min.) Normal and abnormal so!la"# !n $n!%s&
1. Total spoiled units 12,000
Normal spoilage in units, 5% 132,000 6,600
Abnormal spoilage in units 5,00
2. Abnormal spoilage, 5,00 !10 ! 5,000
Normal spoilage, 6,600 !10 66,000
"otential sa#ings, 12,000 !10 !120,000
$egardless o% t&e targeted normal spoilage, abnormal spoilage is non're(urring and
a#oidable. T&e targeted normal spoilage rate is sub)e(t to (&ange. *an+ (ompanies &a#e redu(ed
t&eir spoilage to almost ,ero, -&i(& -ould reali,e all potential sa#ings. .% (ourse, ,ero spoilage
usuall+ means &ig&er'/ualit+ produ(ts, more (ustomer satis%a(tion, more emplo+ee satis%a(tion,
and #arious bene%i(ial e%%e(ts on nonmanu%a(turing (%or e0ample, pur(&asing) (osts o% dire(t
materials.
18-1' (20 min.) W#!"(%#d-a)#ra"# m#%(od, so!la"#, #*$!)al#n% $n!%s.
1olution 20&ibit 13'14 (al(ulates e/ui#alent units o% -or5 done to date %or dire(t materials and
(on#ersion (osts.
SOL+TION E,HI-IT 18-1'
1ummari,e .utput in "&+si(al 6nits and 7ompute .utput in 2/ui#alent 6nits8
9eig&ted'A#erage *et&od o% "ro(ess 7osting -it& 1poilage,
:ra+ *anu%a(turing 7ompan+ %or No#ember 200;.
.S%# 1/ .S%# 0/
E*$!)al#n% +n!%s
1lo2 o3 Prod$4%!on
P(5s!4al
+n!%s
D!r#4%
6a%#r!als
Con)#rs!on
Cos%s
9or5 in pro(ess, beginning (gi#en)
1tarted during (urrent period
To a((ount %or
:ood units (ompleted and trans%erred out
during (urrent period<
Normal spoilage=
100 100%8 100 100%
Abnormal spoilage
>
50 100%8 50 100%
9or5 in pro(ess, ending
?
(gi#en)
2,000 100%8 2,000 30%
A((ounted %or
1,000
10,150
a
11,150
;,000
100
50
2,000

11,150
;,000
100
50
2,000

11,150
;,000
100
50
600

;,450
13'1
9or5 done to date
a
@rom belo-, 11,150 total units are a((ounted %or. T&ere%ore, units started during (urrent period must be A 11,150 1,000 A 10,150.
=Begree o% (ompletion o% normal spoilage in t&is department< dire(t materials, 100%8 (on#ersion (osts, 100%.
>
Begree o% (ompletion o% abnormal spoilage in t&is department< dire(t materials, 100%8 (on#ersion (osts, 100%.
?
Begree o% (ompletion in t&is department< dire(t materials, 100%8 (on#ersion (osts, 30%.
18-18 (2025 min.) W#!"(%#d-a)#ra"# m#%(od, ass!"n!n" 4os%s .4on%!n$a%!on o3 18-1'/&
1olution 20&ibit 13'13 summari,es total (osts to a((ount %or, (al(ulates t&e (osts per e/ui#alent
unit %or dire(t materials and (on#ersion (osts, and assigns total (osts to units (ompleted and
trans%erred out (in(luding normal spoilage), to abnormal spoilage, and to units in ending -or5 in
pro(ess.
SOL+TION E,HI-IT 18-18
1ummari,e Total 7osts to A((ount @or, 7ompute 7ost per 2/ui#alent 6nit, and Assign Total
7osts to 6nits 7ompleted, to 1poiled 6nits, and to 6nits in 2nding 9or5 in "ro(ess8
9eig&ted'A#erage *et&od o% "ro(ess 7osting,
:ra+ *anu%a(turing 7ompan+, No#ember 200;.
To%al
Prod$4%!on
Cos%s
D!r#4%
6a%#r!als
Con)#rs!on
Cos%s
.S%# 7/ 9or5 in pro(ess, beginning (gi#en)
7osts added in (urrent period (gi#en)
Total (osts to a((ount %or
.S%# 8/ 7osts in(urred to date
Bi#ided b+ e/ui#alent units o% -or5 done to date
7ost per e/ui#alent unit
.S%# 9/ Assignment o% (osts
:ood units (ompleted and trans%erred out (;,000 units)
! 2,533
3;,;30
!2,63
! 1,23
12,130
!13,603
!13,603
11,150
! 1 .22
! 1,110
24,450
!23,360
!23,360
;,450
! 2 .;6
7osts be%ore adding normal spoilage
Normal spoilage (100 units)
(A) Total (ost o% good units (ompleted C trans%. out
(D) Abnormal spoilage (50 units)
(7) 9or5 in pro(ess, ending (2,000 units)
(A)E(D)E(7) Total (osts a((ounted %or
!34,620
13
33,033
20;
,216
!2,63
(;,000
F
!1.22) E (;,000
F
!2.;6)
(100
F
!1.22) E (100
F
!2.;6)

(50
F
!1.22) E (50
F
!2.;6)
(2,000
F
!1.22) E (600
F
!2.;6)
!13,603 E !23,360

F
2/ui#alent units o% dire(t materials and (on#ersion (osts (al(ulated in 1tep 2 in 1olution 20&ibit 13'14.
13'2
18-1: (15 min.) 1I1O m#%(od, so!la"#, #*$!)al#n% $n!%s&
1olution 20&ibit 13'1; (al(ulates e/ui#alent units o% -or5 done in t&e (urrent period %or dire(t
materials and (on#ersion (osts.
SOL+TION E,HI-IT 18-1:
@irst'in, @irst'out (@G@.) *et&od o% "ro(ess 7osting -it& 1poilage,
:ra+ *anu%a(turing 7ompan+ %or No#ember 200;.
.S%# 1/
.S%# 0/
E*$!)al#n% +n!%s
1lo2 o3 Prod$4%!on
P(5s!4al
+n!%s
D!r#4%
6a%#r!als
Con)#rs!on
Cos%s
1tarted during (urrent period
To a((ount %or
:ood units (ompleted and trans%erred out during (urrent period<
@rom beginning -or5 in pro(ess
HH
1,000 (100% 100%)8 1,000 (100% 50%)
1tarted and (ompleted
3,000 100%8 3,000 100%
Normal spoilage=
100 100%8 100 100%
Abnormal spoilage
>
50 100%8 50 100%
?
2,000 100%8 2,000 30%
A((ounted %or
9or5 done in (urrent period onl+
1,000
10,150
a
11,150
1,000
3,000
F
100
50
2,000
IIII
11,150
0
3,000
100
50
2,000

10,150
500
3,000
100
50
600

;,250
a
@rom belo-, 11,150 total units are a((ounted %or. T&ere%ore, units started during (urrent period must be 11,150
1,000 A 10,150.
HH
F
;,000 p&+si(al units (ompleted and trans%erred out minus 1,000 p&+si(al units (ompleted and trans%erred out %rom
beginning -or5'in'pro(ess in#entor+.
=Begree o% (ompletion o% normal spoilage in t&is department< dire(t materials, 100%8 (on#ersion (osts, 100%.
>
?
13'3
18-0; (2025 min.) 1I1O m#%(od, ass!"n!n" 4os%s .4on%!n$a%!on o3 18-1:/&
1olution 20&ibit 13'20 summari,es total (osts to a((ount %or, (al(ulates t&e (osts per e/ui#alent
unit %or dire(t materials and (on#ersion (osts, and assigns total (osts to units (ompleted and
trans%erred out (in(luding normal spoilage), to abnormal spoilage, and to units in ending -or5 in
pro(ess.
SOL+TION E,HI-IT 18-0;
@G@. *et&od o% "ro(ess 7osting,
:ra+ *anu%a(turing 7ompan+, No#ember 200;.
To%al
Prod$4%!on
Cos%s
D!r#4%
6a%#r!als
Con)#rs!on
Cos%s
.S%# 8/ 7osts added in (urrent period
Bi#ided b+ e/ui#alent units o% -or5 done in (urrent period
.S%# 9/ Assignment o% (osts<
! 2,533
3;,;30
!2,63

! 1,23
12,130
!13,603
!12,130
10,150
! 1.20
! 1,110
24,450
!23,360
!24,450
;,250
! 3
9or5 in pro(ess, beginning (1,000 units)
7osts added to beg. -or5 in pro(ess in (urrent period
Total %rom beginning in#entor+ be%ore normal
spoilage
1tarted and (ompleted be%ore normal spoilage (3,000 units)
(A) Total (osts o% good units (ompleted and trans%erred out
! 2,533
1,500

,033
33,600
20
33,053
210
,200
!2,63
!1,23 E !1,110
(0
a
!1.20) E (500
a
!3)
(3,000
a
!1.20) E (3,000
a
!3)
(100
a
!1.20) E (100
a
!3)
(50
a
!1.20) E (50
a
!3)
(2,000
a
!1.20) E (600
a
!3)
!13,603 E !23,360
a
2/ui#alent units o% dire(t materials and (on#ersion (osts (al(ulated in 1tep 2 in 1olution 20&ibit 13'1;.
13'
18-01 (35 min.) W#!"(%#d-a)#ra"# m#%(od, so!la"#&
1. 1olution 20&ibit 13'21A (al(ulates e/ui#alent units o% -or5 done in t&e (urrent period %or
dire(t materials and (on#ersion (osts.
SOL+TION E,HI-IT 18-01A
9eig&ted'A#erage *et&od o% "ro(ess 7osting -it& 1poilage,
Appleton 7ompan+ %or August 200;.
.S%# 1/ .S%# 0/
E*$!)al#n% +n!%s
1lo2 o3 Prod$4%!on
P(5s!4al
+n!%s
D!r#4%
6a%#r!als
Con)#rs!on
Cos%s
2,0
00
1tarted during (urrent period (gi#en) 10,000
To a((ount %or 12,000
:ood units (ompleted and ts%d. out during (urrent period< ;,000 ;,000 ;,000
Normal spoilage
a
;00
(;00
100%8 ;00
100%) ;00 ;00

Abnormal spoilage
b
300
(300
100%8 300
100%) 300 300

(
(gi#en) 1,300
(1,300
100%8 1,300
45%) IIIIII 1,300 1,350

A((ounted %or 12,000 IIIIII IIIIII
9or5 done to date 12,000 11,550

a
Normal spoilage is 10% o% good units trans%erred out< 10% J ;,000 A ;00 units. Begree o% (ompletion o% normal spoilage
in t&is department< dire(t materials, 100%8 (on#ersion (osts, 100%.
b
Total spoilage A Deg. units E 6nits started ' :ood units trans%erred out 2nding units A 2,000 E 10,000 ' ;,000 ' 1,300 A 1,2008
Abnormal spoilage A Total spoilage Normal spoilage A 1,200 ;00 A 300 units. Begree o% (ompletion o% abnormal spoilage
in t&is department< dire(t materials, 100%8 (on#ersion (osts, 100%.
(
13'5
2. 1olution 20&ibit 13'21D summari,es total (osts to a((ount %or, (al(ulates t&e (osts per
e/ui#alent unit %or dire(t materials and (on#ersion (osts, and assigns total (osts to units
(ompleted and trans%erred out (in(luding normal spoilage), to abnormal spoilage, and to units in
ending -or5 in pro(ess, using t&e -eig&ted'a#erage met&od.
SOL+TION E,HI-IT 18-01-
9eig&ted'A#erage *et&od o% "ro(ess 7osting,
Appleton 7ompan+, August 200;.

To%al
Prod$4%!on
Cos%s
D!r#4%
6a%#r!als
Con)#rs!on
Cos%s
.S%# 7/ 9or5 in pro(ess, beginning (gi#en) ! 23,600 !14,400 ! 10,;00
7osts added in (urrent period (gi#en) 14,300 31,300 ;3,000
Total (osts to a((ount %or !202,;00 !;;,000 !103,;00
.S%# 8/ 7osts in(urred to date !;;,000 !103,;00
Bi#ide b+ e/ui#alent units o% -or5 done to date 12,000 K11,550
7ost per e/ui#alent unit ! 3.250 ! 3.;;54
7osts be%ore adding normal spoilage !155,211 (;,000
d
!3.25) E (;,000
d
!3.;;54)
Normal spoilage (;00 units) 15,521 (;00
d
!3.25) E (;00
d
!3.;;54)
(A) Total (osts o% good units (ompleted and trans%erred out 140,432
(D) Abnormal spoilage (300 units) 5,14 (300
d
!3.25) E (300
d
!3.;;54)
(7) 9or5 in pro(ess, ending (1,300 units)< 26,;; (1,300
d
!3.25) E (1,350
d
!3.;;54)
(A) E (D) E (7) Total (osts a((ounted %or !202,;00 !;;,000 E !103,;00

d
2/ui#alent units o% dire(t materials and (on#ersion (osts (al(ulated in step 2 o% 1olution 20&ibit 13'21A.
13'6
18-00 (10 min.) S%andard 4os%!n" m#%(od, so!la"#, <o$rnal #n%r!#s&
1poilage represents t&e amount o% resour(es t&at go into t&e pro(ess, but do not result in %inis&ed
produ(t. A simple -a+ to a((ount %or spoilage in pro(ess (osting is to (al(ulate t&e amount
o% dire(t material t&at -as spoiled. T&e )ournal entr+ to re(ord t&e spoilage in(urred in
AaronLs produ(tion pro(ess is<
*anu%a(turing o#er&ead (ontrol (normal spoilage) 250
9or5'in'pro(ess in#entor+ ((ost o% spoiled s&eet metal) 250
18-07 (15 min.) R#4o"n!%!on o3 loss 3rom so!la"#&
1. T&e unit (ost o% ma5ing t&e 10,000 units is<
!20;,000 K 10,000 units A !20.;0 per unit
2. T&e total (ost o% t&e 500 spoiled units is<
!20.;0 J 500 units A !10,50
3. T&e in(rease in t&e per'unit (ost o% goods sold as a result o% t&e normal spoilage is<
!10,50 K ;,500 good units A !1.10
6nit (ost o% goods sold %or units remaining a%ter t&e spoilage A !20.;0 E !1.10 A !22.00.

. T&e !10,50 (ost %or t&e 500 spoiled units is ta5en out o% manu%a(turing (osts and e0pensed in
t&e period o% t&e spoilage. T&e )ournal entr+ to re(ord t&e abnormal spoilage in(urred is<
Moss %rom abnormal spoilage !10,50
9or5'in'pro(ess (ontrol !10,50
13'4
18-08 (25 min.) W#!"(%#d-a)#ra"# m#%(od, so!la"#&
1. 1olution 20&ibit 13'2, "anel A, (al(ulates t&e e/ui#alent units o% -or5 done to date %or
ea(& (ost (ategor+ in 1eptember 2003.
2. 1olution 20&ibit 13'2, "anel D, summari,es total (osts to a((ount %or, (al(ulates t&e
(osts per e/ui#alent unit %or ea(& (ost (ategor+, and assigns total (osts to units (ompleted
(in(luding normal spoilage), to abnormal spoilage, and to units in ending -or5 in pro(ess using
t&e -eig&ted'a#erage met&od.
9eig&ted'A#erage *et&od o% "ro(ess 7osting -it& 1poilage8
7&ip(it+, 1eptember 2003.
PANEL A= S%#s 1 and 0>S$mmar!?# O$%$% !n P(5s!4al +n!%s and Com$%# O$%$% !n
E*$!)al#n% +n!%s
.S%# 1/ .S%# 0/
E*$!)al#n% +n!%s
1lo2 o3 Prod$4%!on
P(5s!4al
+n!%s
D!r#4%
6a%#r!als
Con)#rs!on
Cos%s
1tarted during (urrent period (gi#en)
To a((ount %or
Normal spoilage=
315 100%8 315 100%
Abnormal spoilage
>
235 100%8 235 100%
?
(gi#en)
50 100%8 50 0%
A((ounted %or
9or5 done to date
600
2,55 0
3,15 0
2,100
315
235
50

3,15 0
2,100
315
235
50

3,15 0
2,100
315
235
130

2,33 0
=Normal spoilage is 15% o% good units trans%erred out< 15% 2,100 A 315 units. Begree o% (ompletion o% normal
spoilage in t&is department< dire(t materials, 100%8 (on#ersion (osts, 100%.
>
Total spoilage A 600 E 2,550 2,100 50 A 600 units8 Abnormal spoilage A Total spoilage Normal spoilage A
600 315 A 235 units. Begree o% (ompletion o% abnormal spoilage in t&is department< dire(t materials, 100%8
(on#ersion (osts, 100%.
?
13'3
PANEL -= S%#s 7, 8, and 9> S$mmar!?# To%al Cos%s %o A44o$n% 1or, Com$%# Cos% #r
E*$!)al#n% +n!%, and Ass!"n To%al Cos%s %o +n!%s Coml#%#d, %o So!l#d +n!%s, and %o +n!%s
!n End!n" Wor@ !n Pro4#ss
To%al
Prod$4%!on
Cos%s
D!r#4%
6a%#r!als
Con)#rs!on
Cos%s
:ood units (ompleted and trans%erred out (2,100 units)
!111,300
4;4, 00
! ;03,4 00
! ;6,000
564 ,000
! 663 ,000
!663,000
3,15 0
!210 .46
! 15,300
230, 00
! 25,4 00
!25,400
2,33
!35 .3125
(A) Total (ost o% good units (ompleted and
trans%erred out
(7) 9or5'in'pro(ess, ending (50 units)
!621,156
;3,143

41,32;
3,300
110,041
(2,100
F
!210.46) E (2,100
F
!35.3125)
(315
F
!210.46) E (315
F
!35.3125)
(235
F
!210.46) E (235
F
!35.3125)
(5 0
F
!210.46) E (1 3 0
F
!35.3125)
(A)E(D)E(7) Total (osts a((ounted %or ! ;03,4 00 ! 663 ,000 ! 25,4 00
F
2/ui#alent units o% dire(t materials and (on#ersion (osts (al(ulated in 1tep 2 in "anel A.
13';
18-09 (25 min.) 1I1O m#%(od, so!la"#&
1. 1olution 20&ibit 13'25, "anel A, (al(ulates t&e e/ui#alent units o% -or5 done in t&e
(urrent period %or ea(& (ost (ategor+ in 1eptember 2003.
2. 1olution 20&ibit 13'25, "anel D, summari,es t&e total 7&ip Bepartment (osts %or
1eptember 2003, (al(ulates t&e (osts per e/ui#alent unit %or ea(& (ost (ategor+, and assigns total
(osts to units (ompleted and trans%erred out (in(luding normal spoilage), to abnormal spoilage,
and to units in ending -or5 in pro(ess under t&e @G@. met&od.
@irst'in, @irst'out (@G@.) *et&od o% "ro(ess 7osting -it& 1poilage8
E*$!)al#n% +n!%s
.S%# 1/
.S%# 0/
E*$!)al#n% +n!%s
1lo2 o3 Prod$4%!on
P(5s!4al
+n!%s
D!r#4%
6a%#r!als
Con)#rs!on
Cos%s
To a((ount %or
HH
600 (100% 100%)8 600 (100% 30%)
1,500 100%8 1,500 100%
Normal spoilage=
315 100%8 315 100%
Abnormal spoilage
>
235 100%8 235 100%
?
50 100%8 50 0%
A((ounted %or
600
2,55 0
3,15 0
600
1,500
F
315
235
50

3,15 0
0
1,500
315
235
50

2,55 0
20
1,500
315
235
130

2,40 0
HH
F
2,100 p&+si(al units (ompleted and trans%erred out minus 600 p&+si(al units (ompleted and trans%erred out %rom
beginning -or5 in pro(ess in#entor+.
spoilage in t&is department< dire(t materials, 100%8 (on#ersion (osts, 100%.
>
Abnormal spoilage A A(tual spoilage Normal spoilage A 600 315 A 235 units. Begree o% (ompletion o%
abnormal spoilage in t&is department< dire(t materials, 100%8 (on#ersion (osts, 100%.
?
13'10
PANEL -= S%#s 7, 8 and 9> S$mmar!?# To%al Cos%s %o A44o$n% 1or, Com$%# Cos% #r
To%al
Prod$4%!on
Cos%s
D!r#4%
6a%#r!als
Con)#rs!on
Cos%s
Bi#ided b+ e/ui#alent units o% -or5 done in (urrent
period
!111,3
4;4,
! ;03,40

! ;6,000
564 ,000
!663,000
!564,000
2,55 0
!222.353
! 15,300
230, 00
!25,400
!230,00
2,40 0
! 35.333
9or5 in pro(ess, beginning (600 units)
spoilage
1tarted and (ompleted be%ore normal spoilage
(1,500 units)
(A) Total (osts o% good units (ompleted and
trans%erred out
(7) 9or5 in pro(ess, ending (50 units)
!111,300
35,30
14,10
61,52;
;6,;21
405,5;0
34,6;1
115,1;
!;6,000 E !15,300
(0
N
!222.353) E (20
N
!35.333)
(1,500
N
!222.353)E(1,500
N
!35.333)
(315
N
!222.353) E (315
N
!35.333)
(235
N
!222.353) E (235
N
!35.333)
(50
N
!222.353) E (130
N
!35.333)
(A)E(D)E(7) Total (osts a((ounted %or ! ;03,400 !663,000 E !25,400
N
13'11
18-06 (30 min.) S%andard-4os%!n" m#%(od, so!la"#&
1. 1olution 20&ibit 13'25, "anel A, s&o-s t&e (omputation o% t&e e/ui#alent units o% -or5
done in 1eptember 2003 %or dire(t materials (2,550 units) and (on#ersion (osts (2,400 units).
(T&is (omputation is t&e same %or @G@. and standard'(osting.)
2. T&e dire(t materials (ost per e/ui#alent unit o% beginning -or5 in pro(ess and o% -or5
done in 1eptember 2003 is t&e standard (ost o% !200 gi#en in t&e problem.
T&e (on#ersion (ost per e/ui#alent unit o% beginning -or5 in pro(ess and o% -or5 done
in 1eptember 2003 is t&e standard (ost o% !45 gi#en in t&e problem.
1olution 20&ibit 13'26 summari,es t&e total (osts to a((ount %or, and assigns t&ese (osts
to units (ompleted (in(luding normal spoilage), to abnormal spoilage, and to units in ending
-or5 in pro(ess using t&e standard (osting met&od.
1tandard 7osting *et&od o% "ro(ess 7osting -it& 1poilage8
S%#s 7, 8, and 9>S$mmar!?# To%al Cos%s %o A44o$n% 1or, Com$%# Cos% #r E*$!)al#n%
+n!%, and Ass!"n To%al Cos%s %o +n!%s Coml#%#d, %o So!l#d +n!%s, and %o +n!%s !n End!n"
Wor@ !n Pro4#ss
To%al
Prod$4%!on
Cos%s
D!r#4%
6a%#r!als
Con)#rs!on
Cos%s
.S%# 7/ 9or5 in pro(ess, beginning=
7osts added in (urrent period at standard pri(es
7osts to a((ount %or
.S%# 8/ 1tandard (osts per e/ui#alent unit (gi#en)
.S%# 9/ Assignment o% (osts at standard (osts<
(2,100 units)
!133,500
412,5 00
! 36,000
! 2 45
(600 !200)
(2,55 0 !2 0 0)
!630,000
! 2 0 0
(130 !45)
(2,4 00 ! 45 )
!216,000

! 45
9or5 in pro(ess, beginning (600 units)=
7osts added to beg. -or5 in pro(ess in (urrent
period
spoilage
1tarted and (ompleted be%ore normal spoilage
(1,500 units)
trans%erred out
(7) 9or5 in pro(ess, ending (50 units)
!133,500
31,5 00

165,000
12,500
36,625
66,125
43,345
103,5 00
! 36,0 00
(600 !200) E (130 !45)
(0
N
!200) E (20
N
!45)

(1,500
N
!200) E (1,500
N
!45)
(315
N
!200) E (315
N
!45)
(235
N
!200) E (235
N
!45)
(5 0
N
!2 0 0) E (1 3 0
N
! 45 )
!630,000 E !216,000
=
9or5 in pro(ess, beginning &as 600 e/ui#alent units (600 p&+si(al units 100%) o% dire(t materials and 130
e/ui#alent units (600 p&+si(al units 30%) o% (on#ersion (osts.
N
2/ui#alent units o% dire(t materials and (on#ersion (osts (al(ulated in 1tep 2 in 1olution 20&ibit 13'25, "anel A.
13'12
18-0' (2030 min.) So!la"# and <ob 4os%!n"&
1. 7as& 200
Moss %rom Abnormal 1poilage 1,000
9or5'in'"ro(ess 7ontrol 1,200
Moss A (!6.00 200) !200 A !1,000
$emaining (ases (ost A !6.00 per (ase. T&e (ost o% t&ese (ases is una%%e(ted b+ t&e loss
%rom abnormal spoilage.
2. a. 7as& 00
9or5'in'"ro(ess 7ontrol 00
T&e (ost o% t&e remaining good (ases A O(!6.00 2,500) !00P A !1,600
T&e unit (ost o% a good (ase no- be(omes !1,600 2,300 A !6.343
b. 7as& 00
*anu%a(turing Bepartment .#er&ead 7ontrol 300
T&e unit (ost o% a good (ase remains at !6.00.
(. T&e unit (osts in 2a and 2b are di%%erent be(ause in 2a t&e normal spoilage (ost is
(&arged as a (ost o% t&e )ob -&i(& &as e0a(ting )ob spe(i%i(ations. Gn 2b &o-e#er,
normal spoilage is due to t&e produ(tion pro(ess, not t&e parti(ular attributes o% t&is
spe(i%i( )ob. T&ese (osts are, t&ere%ore, (&arged as part o% manu%a(turing o#er&ead
and t&e manu%a(turing o#er&ead (ost o% !1 per (ase alread+ in(ludes a pro#ision %or
normal spoilage.
3. a. 9or5'in'"ro(ess 7ontrol 200
*aterials 7ontrol, 9ages "a+able 7ontrol,
*anu%a(turing .#er&ead Allo(ated 200
T&e (ost o% t&e good (ases A O(!6.00 2,500) E !200P A !15,200
T&e unit (ost o% a good (ase is !15,200 2,500 A !6.03
b. *anu%a(turing Bepartment .#er&ead 7ontrol 200
*aterials 7ontrol, 9ages "a+able 7ontrol,
*anu%a(turing .#er&ead Allo(ated 200
T&e unit (ost o% a good (ase A !6.00 per (ase
(. T&e unit (osts in 3a and 3b are di%%erent be(ause in 3a t&e normal re-or5 (ost is
(&arged as a (ost o% t&e )ob -&i(& &as e0a(ting )ob spe(i%i(ations. Gn 3b &o-e#er,
normal re-or5 is due to t&e produ(tion pro(ess, not t&e parti(ular attributes o% t&is
spe(i%i( )ob. T&ese (osts are, t&ere%ore, (&arged as part o% manu%a(turing o#er&ead
and t&e manu%a(turing o#er&ead (ost o% !1 per (ase alread+ in(ludes a pro#ision %or
t&is normal re-or5.
13'13
18-08 (15 min.) R#2or@#d $n!%s, 4os%s o3 r#2or@&
1. T&e t-o alternati#e approa(&es to a((ount %or t&e materials (osts o% re-or5ed units are<
a. To (&arge t&e (osts o% re-or5 to t&e (urrent period as a separate e0pense item as
abnormal re-or5. T&is approa(& -ould &ig&lig&t to 9&ite :oods t&e (osts o% t&e
supplier problem.
b. To (&arge t&e (osts o% t&e re-or5 to manu%a(turing o#er&ead as normal re-or5.
2. T&e !50 tumbler (ost is t&e (ost o% t&e a(tual tumblers in(luded in t&e -as&ing ma(&ines.
T&e ! tumbler units %rom t&e %irst supplier -ere e#entuall+ ne#er used in an+ -as&ing
ma(&ine, and t&at supplier is no- ban5rupt. T&e units &a#e no- been disposed o% at ,ero
disposal #alue.
3. T&e total (osts o% re-or5 due to t&e de%e(ti#e tumbler units in(lude t&e %ollo-ing<
a. t&e labor and ot&er (on#ersion (osts spent on substituting t&e ne- tumbler units8
b. t&e (osts o% an+ e0tra negotiations to obtain t&e repla(ement tumbler units8
(. an+ &ig&er pri(e t&e e0isting supplier ma+ &a#e (&arged to do a rus& order %or t&e
repla(ement tumbler units8 and
d. ordering (osts %or t&e repla(ement tumbler units.
13'1
18-0: (25 min.) S4ra, <ob 4os%!n"&
1. Qournal entr+ to re(ord s(rap generated b+ a spe(i%i( )ob and a((ounted %or at t&e time
s(rap is sold is<
7as& or A((ounts $e(ei#able ;0
9or5'in'"ro(ess 7ontrol ;0
To re(ogni,e asset %rom sale o% s(rap.
A memo posting is also made to t&e spe(i%i( )ob re(ord.
2. 1(rap (ommon to #arious )obs and a((ounted %or at t&e time o% its sale (an be a((ounted
%or in t-o -a+s<
a. $egard s(rap sales as a separate line item o% re#enues (t&e met&od generall+ used -&en
t&e dollar amount o% s(rap is immaterial)<
7as& or A((ounts $e(ei#able ,000
1ale o% 1(rap ,000
To re(ogni,e re#enue %rom sale o% s(rap.
b. $egard s(rap sales as o%%sets against manu%a(turing o#er&ead (t&e met&od generall+ used
-&en t&e dollar amount o% s(rap is material)<
7as& or A((ounts $e(ei#able ,000
*anu%a(turing Bepartment .#er&ead 7ontrol ,000
To re(ord (as& raised %rom sale o% s(rap.
3. Qournal entr+ to re(ord s(rap (ommon to #arious )obs at t&e time s(rap is returned to
storeroom<
*aterials 7ontrol ,000
*anu%a(turing Bepartment .#er&ead 7ontrol ,000
To re(ord #alue o% s(rap returned to storeroom.
9&en t&e s(rap is reused as dire(t material on a subse/uent )ob, t&e )ournal entr+ is<
9or5'in'"ro(ess 7ontrol ,000
*aterials 7ontrol ,000
To re(ord reuse o% s(rap on a )ob.
20planations o% )ournal entries are pro#ided &ere but are not re/uired.
13'15
18-7; (30 min.) W#!"(%#d-a)#ra"# m#%(od, so!la"#&
1olution 20&ibit 13'30 summari,es total (osts to a((ount %or, (al(ulates t&e e/ui#alent units o%
-or5 done to date %or ea(& (ost (ategor+, and assigns total (osts to units (ompleted (in(luding
normal spoilage), to abnormal spoilage, and to units in ending -or5 in pro(ess using t&e
-eig&ted'a#erage met&od.
7leaning Bepartment o% t&e Doston 7ompan+ %or *a+.
E*$!)al#n% +n!%s
.S%# 1/ .S%# 0/
E*$!)al#n% +n!%s
1lo2 o3 Prod$4%!on
P(5s!4al
+n!%s
D!r#4%
6a%#r!als
Con)#rs!on
Cos%s
To a((ount %or
Normal spoilage=
1,350 100%8 1,350 100%
Abnormal spoilage
>
650 100%8 650 100%
?
(gi#en)
,000 100%8 ,000 25%
A((ounted %or
9or5 done to date
2,500
22,5 00
25 ,000
13,500
1,350
650
,000

25 ,000
13,500
1,350
650
,000

25 ,000
13,500
1,350
650
1,000

22,0 00
=Normal spoilage is 10% o% good units trans%erred out< 10% 13,500 A 1,350 units. Begree o% (ompletion o%
normal spoilage in t&is department< dire(t materials, 100%8 (on#ersion (osts, 100%.
>
Total spoilage A 2,500 E 22,500 13,500 ,000 A 2,500 units8 Abnormal spoilage A 2,500 1,350 A 650 units.
?
13'16
To%al
Prod$4%!on
Cos%s
D!r#4%
6a%#r!als
Con)#rs!on
Cos%s
! ,500
2,5 00
! 4,0 00

! 2,500
22,5 00
!25 ,000
!25,000
25 ,000
! 1
! 2,000
20 ,000
!22,0 00
!22,000
22 ,000
! 1
Normal spoilage (1,350 units)
trans%erred out
(7) 9or5 in pro(ess, ending (,000 units)
!34,000
3,40 0
0,400
1,300
5 ,000
! 4,0 00
(13,500
F
!1) E
(1,350
F
!1) E
(650
F
!1) E
(,0 00
F
!1) E
!25 ,000 E
(13,500
F
!1)
(1,350
F
!1)
(650
F
!1)
(1,0 00
F
!1)
!22,0 00
F
2/ui#alent units o% dire(t materials and (on#ersion (osts (al(ulated in 1tep 2 in "anel A abo#e.
13'14
18-71 (25 min.) 1I1O m#%(od, so!la"#&
@or t&e 7leaning Bepartment, 1olution 20&ibit 13'31 summari,es t&e total (osts %or *a+,
(al(ulates t&e e/ui#alent units o% -or5 done in t&e (urrent period %or dire(t materials and
(on#ersion (osts, and assigns total (osts to units (ompleted and trans%erred out (in(luding normal
spoilage), to abnormal spoilage, and to units in ending -or5 in pro(ess under t&e @G@. met&od.
7leaning Bepartment o% t&e Doston 7ompan+ %or *a+.
E*$!)al#n% +n!%s
.S%# 1/
.S%# 0/
E*$!)al#n% +n!%s
1lo2 o3 Prod$4%!on
P(5s!4al
+n!%s
D!r#4%
6a%#r!als
Con)#rs!on
Cos%s
9or5 in pro(ess, beginning (gi#en) 2,500
1tarted during (urrent period (gi#en) 22,5 00
To a((ount %or 25 ,000
:ood units (ompleted and trans%erred out during (urrent period<
HH
2,500
2,500 (100% 100%)8 2,500 (100% 30%) 0 500
1tarted and (ompleted 16,000
F
16,000 100%8 16,000 100% 16,000 16,000
Normal spoilage= 1,350
1,350 100%8 1,350% 100% 1,350 1,350
Abnormal spoilage
>
650
650 100%8 650 100% 650 650
?
,000
,000 100%8 ,000 25% IIIII ,000 1,000
A((ounted %or 25 ,000 IIIII IIIII
9or5 done in (urrent period onl+ 22,5 00 20 ,000
HH
F
13,500 p&+si(al units (ompleted and trans%erred out minus 2,500 p&+si(al units (ompleted and trans%erred out %rom
=Normal spoilage is 10% o% good units trans%erred out< 10% 13,500 A 1,350 units. Begree o% (ompletion o%
normal spoilage in t&is department< dire(t materials, 100%8 (on#ersion (osts, 100%.
>
Total spoilage A 2,500 E 22,500 13,500 ,000 A 2,500 units
Abnormal spoilage A 2,500 1,350 A 650 units. Begree o% (ompletion o% abnormal spoilage in t&is department<
dire(t materials, 100%8 (on#ersion (osts, 100%.
?
13'13
To%al
Prod$4%!on
Cos%s
D!r#4%
6a%#r!als
Con)#rs!on
Cos%s
Bi#ided b+ e/ui#alent units o% -or5 done in (urrent period
! ,500
2,5 00
! 4,0 00

! 2,500
22,500
!25 ,000
!22,500
22,5 00
! 1
! 2,000
20,000
!22 ,000
!20,000
20 ,000
! 1
Total %rom beginning in#entor+ be%ore normal spoilage
1tarted and (ompleted be%ore normal spoilage (16,000 units)
(A) Total (osts o% good units (ompleted and trans%erred out
(7) 9or5 in pro(ess, ending (,000 units)
! ,500
5 00
5,000
32,000
3,40 0
0,400
1,300
5 ,000
! 4,0 00

!2,500 E !2,000
(0
N
!1) E (500
N
!1)
(16,000
N
!1) E (16,000
N
!1)
(1,350
N
!1) E (1,350
N
!1)
(650
N
!1) E (650
N
!1)
(,0 00
N
!1) E (1,0 00
N
!1)
!25,000 E !22,000
N
13'1;
18-70 (35 min.) W#!"(%#d-a)#ra"# m#%(od, Pa4@a"!n" D#ar%m#n% .4on%!n$a%!on o3 18-
7;/&
@or t&e "a(5aging Bepartment, 1olution 20&ibit 13'32 summari,es total (osts to a((ount %or,
(al(ulates t&e e/ui#alent units o% -or5 done to date %or ea(& (ost (ategor+, and assigns (osts to
units (ompleted (in(luding normal spoilage), to abnormal spoilage, and to units in ending -or5
in pro(ess using t&e -eig&ted'a#erage met&od.
"a(5aging Bepartment o% t&e Doston 7ompan+ %or *a+.
E*$!)al#n% +n!%s
.S%# 1/ .S%# 0/
E*$!)al#n% +n!%s
1lo2 o3 Prod$4%!on
P(5s!4al
+n!%s
Trans3#rr#d-
!n Cos%s
D!r#4%
6a%#r!als
Con)#rs!on
Cos%s
To a((ount %or
Normal spoilage=
450 100%8 450 100%8 450 100%
Abnormal spoilage
>
250 100%8 250 100%, 250 100%
?
(gi#en)
10,000 100%8 10,0000%8 10,00025%
A((ounted %or
9or5 done to date
4,500
13,5 00
26,0 00
15,000
450
250
10,000

26,0 00
15,000
450
250
10,000

26,0 00
15,000
450
250
0
IIIIII
16,0 00
15,000
450
250
2,500
IIIII
13,5 00
=Normal spoilage is 5% o% good units trans%erred out< 5% 15,000 A 450 units. Begree o% (ompletion o% normal spoilage in t&is
department< trans%erred'in (osts, 100%8 dire(t materials, 100%8 (on#ersion (osts, 100%.
>
Total spoilage A4,500 E 13,500 15,000 10,000 A 1,000 units. Abnormal spoilage A 1,000 450 A 250 units. Begree o%
(ompletion o% abnormal spoilage in t&is department< trans%erred'in (osts, 100%8 dire(t materials, 100%8 (on#ersion (osts,
100%.
?
Begree o% (ompletion in t&is department< trans%erred'in (osts, 100%8 dire(t materials, 0%8 (on#ersion (osts, 25%.
13'20
To%al
Prod$4%!on
Cos%s
Trans3#rr#d-!n
4os%s
D!r#4%
6a%#r!als
Con)#rs!on
Cos%s
(15,000 units)
!22,250
5,645
! 46,;25

!16,125
0,40 0=
!56,325
56,325
26,0 00
!2 .1356
! 0
1,60 0
!1,60 0
1,600
16,0 00
! 0 .10
! 6,125
12,345
!13,5 00
13,500
13,5 00
! 1
(A) Total (ost o% good units (ompleted and
trans%erred out
(A)E(D)E(7)Total (osts a((ounted %or
!;,23
2,6
51,43
321
2,356
! 46,;25
15,000
F
(!2.1356 E !0.10 E !1)
450
F
(!2.1356 E !0.10 E !1)
250
F
(!2.1356 E !0.10 E !1)
(10 ,000
F
!2.1356)E(0
F
!0.10)E(2,5 00
F
!1)
!56,325 E !1,60 0 E !13,5 00
=Total (osts o% good units (ompleted and trans%erred out in "anel D (1tep 5) o% 1olution 20&ibit 13'30.
F
2/ui#alent units o% dire(t materials and (on#ersion (osts (al(ulated in 1tep 2 in "anel A abo#e.
13'21
18-77 (25 min.) 1I1O m#%(od, Pa4@a"!n" D#ar%m#n% .4on%!n$a%!on o3 18-71/&
1olution 20&ibit 13'33 summari,es t&e total "a(5aging Bepartment (osts %or *a+, s&o-s t&e
e/ui#alent units o% -or5 done in t&e "a(5aging Bepartment in t&e (urrent period %or trans%erred'
in (osts, dire(t materials, and (on#ersion (osts, and assigns total (osts to units (ompleted and
trans%erred out (in(luding normal spoilage), to abnormal spoilage, and to units in ending -or5'
in'pro(ess under t&e @G@. met&od.
"a(5aging Bepartment o% t&e Doston 7ompan+ %or *a+.
E*$!)al#n% +n!%s
.S%# 1/
.S%# 0/
E*$!)al#n% +n!%s
1lo2 o3 Prod$4%!on
P(5s!4al
+n!%s
Trans3#rr#d-
!n Cos%s
D!r#4%
6a%#r!als
Con)#rs!on
Cos%s
To a((ount %or
:ood units (ompleted and trans%erred out during
(urrent period<
HH
4,500 (100% 100%)8 4,500
(100% 0%)8 4,500 (100% 30%)
4,500 100%8 4,500 100%8 4,500 100%
Normal spoilage=
450 100%8 450% 100%8 450 100%
Abnormal spoilage
>
250 100%8 250 100%8 250 100%
?
10,000 100%8 10,000 0%8 10,000 25%
A((ounted %or
4,500
13,5 00
26,0 00
4,500
4,500
F
450
250
10,000

26,0 00
0
4,500
450
250
10,000

13,5 00
4,500
4,500
450
250
0

16,0 00
1,500
4,500
450
250
2,500

12,5 00
HH
Begree o% (ompletion in t&is department< trans%erred'in (osts, 100%8 dire(t materials, 0%8 (on#ersion (osts, 30%.
F
15,000 p&+si(al units (ompleted and trans%erred out minus 4,500 p&+si(al units (ompleted and trans%erred out %rom
spoilage in t&is department< trans%erred'in (osts, 100%8 dire(t materials, 100%8 (on#ersion (osts, 100%.
>
Total spoilage A 4,500 E 13,500 15,000 10,000 A 1,000 units.
Abnormal spoilage A 1,000 450 A 250 units. Begree o% (ompletion o% abnormal spoilage in t&is department<
trans%erred'in (osts, 100%8 dire(t materials, 100%8 (on#ersion (osts, 100%.
?
Begree o% (ompletion in t&is department< trans%erred'in (osts, 100%8 dire(t materials, 0%8
(on#ersion (osts, 25%.
13'22
To%al
Prod$4%!on
Cos%s
Trans3#rr#d-
!n Cos%s
D!r#4%
6a%#r!als
Con)#rs!on
Cos%s
Bi#ided b+ e/ui#alent units o% -or5 done in
(urrent period
(15,000 units)
!22,250
5,645
! 46,;25
!16,125
0,40 0=
!56,325
!0,400
13,5 00
! 2.20
! 0
1,60 0
!1,600
!1,600
K16,0 00
! 0.10
! 6,125
12,345
!13,500
!12,345
12,5 00
! 0.;;
7osts added to beg. -or5 in pro(ess in
(urrent period
Total %rom beginning in#entor+ be%ore
normal spoilage
1tarted and (ompleted be%ore normal
spoilage (4,500 units)
trans%erred out
!22,250
2,235
2,35
2,645
2,64

51,624
323
2,45
!46,;25
!16,125 E !0 E !6,125
(0 !2.20) E (4,500
N
0.10)E(1,500
N
!0.;;)
4,500
N
(!2.20 E !0.10 E !0.;;)
450
N
(!2.20 E !0.10 E !0.;;)
250
N
(!2.20 E !0.10 E !0.;;)
(10 ,000
N
!2.20)E(0
N
!0.10)E(2,5 00
N
!0.;;)
!56,325 E !1,600 E !13,500
=Total (osts o% good units (ompleted and trans%erred out in 1tep 5 "anel D o% 1olution 20&ibit 13'31.
N
13'23
18-78 (2025 min.) Aob-4os%!n" so!la"# and s4ra&
1. a. *aterials 7ontrol 300
*anu%a(turing .#er&ead 7ontrol 1,045
(;45 E 600 E 300 A 1,345)
b. A((ounts $e(ei#able or 7as& 1,;;5
9or5'in'"ro(ess 7ontrol 1,;;5
2. a. T&e (lause does not spe(i%+ -&et&er t&e 1% (al(ulation is to be based on t&e input
(ost (!0,00 E !22,600 E !11,300) or t&e (ost o% t&e good output be%ore t&e R1% normal
spoilageR is added.
b. If the inputs are used to determine the 1%:
!0,00 E !22,600 E !11,300 A !4,300
1% o% !4,300 A !43. T&en, t&e entr+ to lea#e t&e !43 Rnormal spoilageR (ost on t&e
)ob, remo#e t&e sal#ageable material, and (&arge manu%a(turing o#er&ead -ould be<
*aterials 7ontrol 300
*anu%a(turing .#er&ead 7ontrol 332
(!1,045 spoilage minus !43 A !332 spoilage
(ost t&at is ta5en out o% t&e )ob8
!300 sal#age #alue plus !332 A !1,1328 or
!1,345 minus !43 A !1,132)
If the outputs are used to determine the 1%:
!0,00 !;45 A !3;,25
22,600 600 A 22,000
11,300 300 A 11,000
! 4,300 ! 42,25
T&en, !42,25 1% A !42.25 or !42, rounded. T&e )ournal entr+ -ould be<
13'2
18-79 (15 min.) So!la"# !n <ob 4os%!n"
1. Normal spoilage rateA 6nits o% normal spoilage K Total good units (ompleted
A 5 K 35
A 1.3%.
2.
a) Qournal entr+ %or spoilage related to a spe(i%i( )ob<
*aterials 7ontrol (spoiled goods at (urrent disposal #alue) 5 J !200 1,000
9or5'in'"ro(ess 7ontrol (Qob F10) 1,000
Note< T&e (osts in(urred on t&e bad units (5 J !1,000) are alread+ part o% t&e balan(e in 9G".
T&e (ost o% t&e 35 good units is (35 J 1,000) E (5 J !300) A !3;,000
b) Qournal entr+ %or spoilage (ommon to all )obs<
*anu%a(turing .#er&ead 7ontrol (normal spoilage) ,000
Note< Gn de#eloping t&e predetermined .ST rate, t&e budgeted manu%a(turing o#er&ead -ould
in(lude e0pe(ted normal spoilage (osts.
() Qournal entr+ %or abnormal spoilage<
Moss %rom Abnormal 1poilage 5 J !300 ,000
9or5'in'"ro(ess 7ontrol ()ob F10) 5,000
Note< G% t&e spoilage is abnormal, t&e net loss is &ig&lig&ted and al-a+s (&arged to an abnormal
loss a((ount.
18-76 (10 min.) R#2or@ !n <ob 4os%!n", <o$rnal #n%r5 .4on%!n$a%!on o3 18-79/
a) Qournal entr+ %or re-or5 related to a spe(i%i( )ob<
Uarious A((ounts 1,300
(To (&arge re-or5 (osts to t&e )ob)
b) Qournal entr+ %or re-or5 (ommon to all )obs<
*anu%a(turing .#er&ead 7ontrol (re-or5 (osts) 1,300
() Qournal entr+ %or abnormal re-or5<
Moss %rom Abnormal $e-or5 1,300
13'25
18-7' (10 min.) S4ra a% %!m# o3 sal# or a% %!m# o3 rod$4%!on, <o$rnal #n%r!#s
.4on%!n$a%!on o3 18-79/
a) Qournal entr+ %or re(ogni,ing immaterial s(rap at time o% sale<
7as& or A((ounts $e(ei#able 300
1(rap $e#enues 300
(To re(ord ot&er re#enue sale o% s(rap)
b) Qournal entr+ %or re(ogni,ing material s(rap related to a spe(i%i( )ob at time o% sale<
9or5'in'"ro(ess 7ontrol (Qob F10) 300
() Qournal entr+ %or re(ogni,ing material s(rap (ommon to all )obs at time o% sale<
d) Qournal entr+ %or re(ogni,ing material s(rap as in#entor+ at time o% produ(tion and re(ording
at net reali,able #alue<
9or5'in'"ro(ess 7ontrol (Qob F10) 300
(9&en later sold)
18-78 (2025 min.) P(5s!4al $n!%s, !ns#4%!on a% )ar!o$s s%a"#s o3 4oml#%!on .4(a%#r
a#nd!B/&
Ins#4%!on Ins#4%!on Ins#4%!on
a% 19C a% 8;C a% 1;;C
9or5 in pro(ess, beginning (20%)=
1tarted during *ar(&
To a((ount %or
1,000
120,000
13,000
1,000
120,000
13,000
1,000
120,000
13,000
Normal spoilage
113,000
a
6,600
b
113,000
a
4,0
(
113,000
a
6,430
d
Abnormal spoilage (10,000 normal spoilage)
9or5 in pro(ess, ending (40%)=
A((ounted %or
3,00
11,000
13,000
2,560
11,000
13,000
3,220
11,000
13,000
=Begree o% (ompletion %or (on#ersion (osts o% t&e %orging pro(ess at t&e dates o% t&e -or5'in'pro(ess in#entories
a
1,000 beginning in#entor+ E120,000 10,000 spoiled 11,000 ending in#entor+ A 113,000.
b
6% (120,000 units started 10,000 units spoiled) A 6% 110,000 A 6,6008 beginning -or5'in'pro(ess in#entor+
is e0(luded be(ause it -as alread+ 20% (omplete at *ar(& 1 and past t&e inspe(tion point.
(
6% (13,000 units 10,000 ) A 6% 12,000 A 4,0, be(ause all units passed t&e 0% (ompletion inspe(tion
point in *ar(&.
d
6% 113,000 A 6,430, be(ause 113,000 units are %ull+ (ompleted and inspe(ted during *ar(&.
13'26
18-7: (2535 min.) W#!"(%#d-a)#ra"# m#%(od, !ns#4%!on a% 8;C 4oml#%!on .4(a%#r
a#nd!B/&
T&e (omputation and allo(ation o% spoilage is t&e most di%%i(ult part o% t&is problem. T&e units in
t&e ending in#entor+ &a#e passed inspe(tion. T&ere%ore, o% t&e 100,000 units to a((ount %or
(12,500 beginning E 34,500 started), 12,500 must &a#e been spoiled in *a+ O100,000 (62,500
(ompleted E 25,000 ending in#entor+)P. Normal spoilage is 3,450 O0.10 (62,500 E 25,000)P.
T&e 3,450 remainder is abnormal spoilage (12,500 3,450).
1olution 20&ibit 13'3;, "anel A, (al(ulates t&e e/ui#alent units o% -or5 done %or ea(&
(ost (ategor+. 9e (omment on se#eral points in t&is (al(ulation<
2nding -or5 in pro(ess in(ludes an element o% normal spoilage sin(e all t&e ending
9G" &a#e passed t&e point o% inspe(tioninspe(tion o((urs -&en produ(tion is 30%
(omplete, -&ile t&e units in ending 9G" are ;5% (omplete.
1poilage in(ludes no dire(t materials units be(ause spoiled units are dete(ted and
remo#ed %rom t&e %inis&ing a(ti#it+ -&en inspe(tion o((urs at t&e time produ(tion is
30% (omplete. Bire(t materials are added onl+ later -&en produ(tion is ;0%
(omplete.
Bire(t materials units are in(luded %or ending -or5 in pro(ess, -&i(& is ;5%
(omplete, but not %or beginning -or5 in pro(ess, -&i(& is 25% (omplete. T&e reason
is t&at dire(t materials are added -&en produ(tion is ;0% (omplete. T&e ending -or5
in pro(ess, t&ere%ore, (ontains dire(t materials units8 t&e beginning -or5 in pro(ess
does not.
1olution 20&ibit 13'3;, "anel D, summari,es total (osts to a((ount %or, (omputes t&e (osts
per e/ui#alent unit %or ea(& (ost (ategor+, and assigns (osts to units (ompleted (in(luding
normal spoilage), to abnormal spoilage, and to units in ending -or5 in pro(ess using t&e
-eig&ted'a#erage met&od. T&e (ost o% ending -or5 in pro(ess in(ludes t&e assignment o% normal
spoilage (osts sin(e t&ese units &a#e passed t&e point o% inspe(tion. T&e (osts assigned to ea(&
(ost (ategor+ are as %ollo-s<
7ost o% good units (ompleted and trans%erred out
(in(luding normal spoilage (osts on good units) !2,36,634
Abnormal spoilage 3,633
7ost o% ending -or5 in pro(ess (in(luding normal
spoilage (osts on ending -or5 in pro(ess) ;14,645
Total (osts assigned and a((ounted %or ! 3,3;,0 00

13'24
@inis&ing Bepartment o% t&e Vim 7ompan+ %or August.
E*$!)al#n% +n!%s
.S%# 1/ .S%# 0/
E*$!)al#n% +n!%s
1lo2 o3 Prod$4%!on
P(5s!4al
+n!%s
Trans3#rr#d-
!n Cos%s
D!r#4%
6a%#r!als
Con)#rs!on
Cos%s
To a((ount %or
Normal spoilage on good units=
6,250 100%8 6,250 0%8 6,250 30%
?
(gi#en)
25,000 100%8 25,000 100%8 25,000 ;5%
Normal spoilage on ending 9G"==
2,500 100%8 2,500 0%8 2,500 30%
Abnormal spoilage
>
3,450 100%8 3,450 0%8 3,450 30%
A((ounted %or
9or5 done to date
12,500
34,5 00
10 0,000
62,500
6,250
25,000
2,500
3,450

10 0,000
62,500
6,250
25,000
2,500
3,450

10 0,000
62,500
0
25,000
0
0

34,5 00
62,500
5,000
23,450
2,000
3,000

;6,25 0
=Normal spoilage is 10% o% good units t&at pass inspe(tion< 10% 62,500 A 6,250 units. Begree o% (ompletion o% normal
?
Begree o% (ompletion in t&is department< trans%erred'in (osts, 100%8 dire(t materials, 100%8 (on#ersion (osts, ;5%.
==Normal spoilage is 10% o% t&e good units in ending 9G" t&at &a#e passed t&e inspe(tion point, 10% 25,000 A 2,500 units.
Begree o% (ompletion o% normal spoilage in t&is department< trans%erred'in (osts, 100%8 dire(t materials, 0%8 (on#ersion
(osts, 30%.
>
Abnormal spoilage A A(tual spoilage Normal spoilage A 12,500 3,450 A 3,450 units. Begree o% (ompletion o% abnormal
13'23
To%al
Prod$4%!on
Cos%s
Trans3#rr#d-
!n Cos%s
D!r#4%
6a%#r!als
Con)#rs!on
Cos%s
Bi#ided b+ e/ui#alent units o% -or5 done
to date
(62,500 units)
! 156,125
3,1;2,345
! 3,3;,0 00
!103,625
30;,345
!;13,0 00
!;13,000
10 0,000
! ;.13
!
31;,0 00
!31;,0 00
!31;,000
34,5 00
! ; .36
! 52,500
1, 56,5 00
! 1, 614,0 00

!1,614,000
;6,25 0
! 16 .30
(A) Total (osts o% good units (ompleted
and trans%erred out
(D) Abnormal spoilage (3,450 units)
9or5 in pro(ess, ending (25,000 units)
9G" ending, be%ore normal spoilage
Normal spoilage on ending 9G"
(7) Total (osts o% ending 9G"
!2,205,625
1 1,063
2,36,633
3,633
361,250
56,25
;14,645
! 3,3;,0 00
62,500
F
(!;.13 E !;.36 E !16.30)
(6,250
F
!;.13) E (0
F
!;.36) E (5,000
F
!16.30)
(3,450
F
!;.13) E (0
F
!;.36) E (3,000
F
!16.30)
(25,000
F
!;.13) E (25,000
F
!;.36) E (23,450
F
!16.30)
(2, 5 00
F
!;.13) E (0
F
!;.36) E (2,0 00
F
!16.30)
!;13,000 E !31;,000 E !1,614,000
F
2/ui#alent units o% trans%erred'in (osts, dire(t materials, and (on#ersion (osts (al(ulated in 1tep 2 in "anel A.
13'2;
18-8; (30 min.) Aob 4os%!n", r#2or@&
1. 9or5'in'"ro(ess 7ontrol (711 (&ips) (!110 30) 3,300
*aterials 7ontrol (!60 30) ,300
9ages "a+able (!12 30) ;60
*anu%a(turing .#er&ead Allo(ated (!33 30) 3,00
Total (osts assigned to 30 spoiled units o% 711 (&ips be%ore
(onsidering re-or5 (osts.
*anu%a(turing Bepartment .#er&ead 7ontrol (re-or5) 1,300
*aterials 7ontrol (!12 50) 600
9ages "a+able (!; 50) 50
*anu%a(turing .#er&ead Allo(ated (!15 50) 450
Normal re-or5 on 50 units, but not attributable spe(i%i(all+ to
t&e 711 (&ip bat(&es or )obs.
Moss %rom Abnormal $e-or5 (!36 30) 1,030
*aterials 7ontrol (!12 30) 360
9ages "a+able (!; 30) 240
*anu%a(turing .#er&ead Allo(ated (!15 30) 50
Total (osts o% abnormal re-or5 on 30 units
(Abnormal re-or5 A A(tual re-or5 Normal re-or5
A 30 50 A 30 units) o% 711 (&ips.
9or5'in'"ro(ess 7ontrol (711 (&ips) 1,200
9or5'in'"ro(ess 7ontrol (712 (&ips) 600
*anu%a(turing Bepartment .#er&ead Allo(ated (re-or5) 1,300
(Allo(ating manu%a(turing department re-or5 (osts to 711 and
712 in t&e proportion 1,000<500 sin(e ea(& (al(ulator re/uires
t&e same number o% ma(&ine'&ours.)
2. Total re-or5 (osts %or 711 (&ips in August 2003 are as %ollo-s<
Normal re-or5 (osts allo(ated to 711 !1,200
Abnormal re-or5 (osts %or 711 1,03 0
Total re-or5 (osts ! 2,23 0
9e emp&asi,e t-o points<
a. .nl+ !1,200 o% t&e normal re-or5 (osts are allo(ated to 711 e#en t&oug& t&e normal
re-or5 (osts o% t&e 50 711 (al(ulators re-or5ed e/ual !1,300. T&e reason is t&at t&e normal
re-or5 (osts are not spe(i%i(all+ attributable to 711. @or e0ample, t&e ma(&ines &appened to
mal%un(tion -&en 711 -as being made, but t&e re-or5 -as not (aused b+ t&e spe(i%i(
re/uirements o% 711. G% it -ere, t&en all !1,300 -ould be (&arged to 711.
b. Abnormal re-or5 (osts o% !1,030 are lin5ed to 711 in t&e management (ontrol s+stem
e#en t&oug& %or %inan(ial reporting purposes t&e abnormal re-or5 (osts are -ritten o%% to t&e
in(ome statement.
13'30

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CHAPTER 18

SPOILAGE, REWORK, AND SCRAP

100%) ;00 ;00

100%) 300 300

45%) IIIIII 1,300 1,350

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