1.
The loss from abnormal spoilage account would appear PROBLEM 2
________.
A) on a balance sheet
B) as a detailed item in the retained earnings schedule of
a balance sheet
C) a separate line item on an income statement
D) a deduction from the cost of goods sold
2. Normal spoilage rates are computed by ________.
A) dividing the units of normal spoilage by total actual
units started into production
B) dividing the units of normal spoilage by total good units
completed
C) dividing total actual units started into production by the
units of normal spoilage
D) dividing total good units completed by the units of
normal spoilage
3. Which of the following statements is true of normal
spoilage and abnormal spoilage?
A) Normal spoilage is inherent in a particular production
process, whereas abnormal spoilage is not inherent in a
particular production process.
B) Abnormal spoilage arises even when the process is
carried out in an efficient manner, whereas normal
spoilage does not arise when the process is carried out in
an efficient manner.
C) Normal spoilage is usually regarded as avoidable and
controllable, whereas abnormal spoilage is unavoidable
and uncontrollable.
D) The costs of normal spoilage are recorded as a loss as
a separate line item in an income statement, whereas
costs of abnormal spoilage are included as a component
of the costs of good units manufactured.
PROBLEM 1
Colil Computer Systems, Inc., manufactures printer circuit
cards. All direct materials are added at the inception of the
production process. During January, the accounting
department noted that there was no beginning inventory.
Direct materials purchases totaled $300,000 during the
month. Work-in-process records revealed that 10,000 card
units were started in January, 5,000 card units were
complete, and 4,000 card units were spoiled as expected.
Ending work-in-process card units are complete in respect
to direct materials costs. Spoilage is not detected until the
process is complete.
4. What is the direct material cost per equivalent unit?
A) $20.00
B) $30.00
C) $25.00
D) $35.00
5. What is the direct material cost assigned to good units
completed?
A) $150,000
B) $250,000
C) $120,000
D) $270,000
6. What is the amount allocated to the work-in-process
ending inventory?
A) $40,000
B) $50,000
C) $30,000
D) $75,000
The Duolane Pottery manufactures pottery products. All
direct materials are included at the inception of the
production process. For April, there was no beginning
inventory in the processing plant. Direct materials totaled
$180,000 for the month. Work-in-process records revealed
that 3,000 tons were started in April and that 2,100 tons
were finished; 500 tons were spoiled as expected. Ending
work-in-process units are complete in respect to direct
materials costs. Spoilage is not detected until the process
is complete.
7. What is the cost per equivalent unit?
8. What are the costs assigned to completed units?
9. What are the costs transferred out?
10. What are the amounts allocated to the work-in-process
ending inventory?
11. When spoiled goods have a disposal value, the net
cost of the spoilage is computed by ________.
A) deducting disposal value from the costs of the spoiled
goods accumulated to the inspection point
B) adding the costs to complete a saleable product to the
costs accumulated to the inspection point
C) deducting the costs to complete a saleable product
from the costs accumulated to the inspection point
D) adding disposal value to the costs of the good units
transferred
12. The costs of normal spoilage are allocated to the units
in ending work-in-process inventory, in addition to
completed units if the units ________.
A) in ending inventory have not passed the inspection
point
B) in ending work-in-process inventory have passed the
inspection point
C) in ending work in process inventory are more than 25%
complete
D) in ending work-in-process inventory are less than 25%
complete
13. Normal spoilage is computed on the basis of the
number of ________.
A) good units that pass inspection during the current
period
B) units that pass the inspection point during the current
period
C) units that are in ending work in process
D) units that started during the particular period
14. Early inspections can ________.
A) prevent any further conversion costs being wasted on
units that are already good
B) increase conversion costs on units that are already
spoiled
C) increase any further costs being spent on units that are
already spoiled
D) prevent any further costs being wasted on units that
are already spoiled
15. Cost of spoiled units equals ________.
A) all costs incurred in producing them up to the point of
delivery
B) all costs incurred in producing them up to the point of
inspection
C) all costs incurred in producing them up to the point of
selling
D) all costs incurred in producing them up to the point of
packaging