cost accounting test bank chapter 18

1、Cost Accounting, 15e (Horngren/Datar/Rajan)Chapter 18 Spoilage, Rework, and ScrapObjective 18.11) Spoilage refers to _.A) units of production that do not meet the specifications required by customers but that are subsequently repaired and sold as good finished unitsB) units of production whether ful

2、ly or partially completed, that do not meet the specifications required by customers for good units and are discarded or sold at reduced pricesC) residual material that results from manufacturing a productD) products of a joint production process that have low total sales values relative to the tota

3、l sales value of the main productAnswer: BDiff: 2Objective: 1AACSB: Analytical thinking2) Rework refers to _.A) units of production that do not meet the specifications required by customers but that are subsequently repaired and sold as good finished unitsB) products of a joint production process th

4、at have low total sales values relative to the total sales value of the main productC) units of production whether fully or partially completed, that do not meet the specifications required by customers for good units and are discarded or sold at reduced pricesD) residual material that results from

5、manufacturing a productAnswer: ADiff: 2Objective: 1AACSB: Analytical thinking3) Which of the following is an example of spoilage?A) short lengths from woodworking operationsB) edges from plastic molding operationsC) defective units of laptops detected after the production process but reworked before

6、 the units are sold as good products to customersD) defective aluminum cans sold to aluminum manufacturers for remelting to produce other aluminum productsAnswer: DDiff: 2Objective: 1AACSB: Analytical thinking4) Scrap is _.A) units of production that do not meet the specifications required by custom

7、ers but that are subsequently repaired and sold as good finished unitsB) products of a joint production process that have low total sales values relative to the total sales value of the main productC) residual material that results from manufacturing a productD) units of production whether fully or

8、partially completed, that do not meet the specifications required by customers for good units and are discarded or sold at reduced pricesAnswer: CDiff: 2Objective: 1AACSB: Analytical thinking5) A production process which involves spoilage and rework occurs in _.A) the manufacture of high precision m

9、achine tools B) the manufacture of semiconductor units C) the manufacture of clothing D) the mining industryAnswer: ADiff: 2Objective: 1AACSB: Analytical thinking6) Which of the following is an example of scrap?A) short lengths from woodworking operationsB) defective units of laptops detected after

10、the production process but reworked before the units are sold as good products to customersC) defective aluminum cans sold to aluminum manufacturers for remelting to produce other aluminum productsD) defective shirts, jeans, shoes, and carpeting sold as secondsAnswer: ADiff: 2Objective: 1AACSB: Anal

11、ytical thinking7) Some amounts of spoilage, rework, or scrap are inherent in many production processes.Answer: TRUEDiff: 2Objective: 1AACSB: Analytical thinking8) An item classified as spoilage has no value.Answer: FALSEExplanation: Although the item does not meet the specifications, it may be sold

12、as a "second" or for its scrap value. It is not necessarily thrown out.Diff: 2Objective: 1AACSB: Analytical thinking9) Reworked goods are unacceptable units of production usually NOT capable of being repaired or converted into a salable product. Answer: FALSEExplanation: Rework is units of

13、 production that do not meet the specifications required by customers but that are subsequently repaired and sold as good finished units.Diff: 2Objective: 1AACSB: Analytical thinking10) Rework is finished production that is NOT in accordance with customer desires. The product is redone and sold as f

14、inished goods.Answer: TRUEDiff: 2Objective: 1AACSB: Analytical thinking11) Rework is residual material that results from manufacturing a product and can have either a high or low sales value relative to the product with which it is associated. Answer: FALSEExplanation: Scrap is residual material tha

15、t results from manufacturing a product. Examples are short lengths from woodworking operations, edges from plastic molding operations, and frayed cloth and end cuts from suit-making operations. Scrap can sometimes be sold for relatively small amounts.Diff: 2Objective: 1AACSB: Analytical thinking12)

16、Scrap and rework are considered to be the same thing by managerial accountants. Answer: FALSEExplanation: Scrap and rework are not considered to be the same thing by managerial accountants.Diff: 2Objective: 1AACSB: Analytical thinking13) There is no difference between scrap which can be sold for rel

17、atively small amount and a byproduct.Answer: FALSEExplanation: The difference is that scrap arises as a residual from the manufacturing process and is not a product targeted for manufacture or sale by the firm.Diff: 2Objective: 1AACSB: Analytical thinking14) Distinguish among spoilage, reworked unit

18、s, and scrap. Give an example of each. Answer: Spoilage refers to unacceptable units of production that are discarded or are sold for reduced prices. Both partially completed or fully completed units of output can be spoiled. Examples are defective clothes sold as seconds. Reworked units are unaccep

19、table units of production that are subsequently repaired and sold as acceptable finished goods. Defective units of product (such as pagers, computer disk drives, computers, and telephones) detected during production or immediately after production but before units are shipped to customers, can somet

20、imes be reworked and sold as good products. Scrap is material left over when making a product. It has low sales value compared with the sales value of the product. Examples are shavings and short lengths from woodworking operations and edges left over from plastic molding operations. Diff: 2Objectiv

21、e: 1AACSB: Analytical thinking15) For each of the following items identify whether it is spoilage, reworked units, or scrap. _a.Defective shirts sold as seconds_b.End cuts from suit-making operations_c.Edges from plastic moldings_d.Carpets sold as seconds_e.Precision tools that are not built success

22、fully to the necessary tolerance, but which can be successfully converted to a saleable product_f.Rock extracted as a result of mining processing_g.Complex defective products such as semiconductors Answer: a.spoilageb.scrapc.scrapd.spoilagee.spoilage and reworkf.scrapg.spoilage (usually too complex

23、to rework) Diff: 2Objective: 1AACSB: Analytical thinkingObjective 18.21) Spoilage that is an inherent result of the particular production process and arises even under efficient operating conditions is referred to as _.A) incremental spoilage B) normal spoilage C) irregular spoilage D) direct spoila

24、geAnswer: BDiff: 2Objective: 2AACSB: Analytical thinking2) Spoilage that is not inherent in a particular production process and would not arise under efficient operating conditions is referred to as _.A) incremental spoilage B) usual spoilage C) abnormal spoilage D) indirect spoilageAnswer: CDiff: 2

25、Objective: 2AACSB: Analytical thinking3) Costs of normal spoilage are usually accounted for as _.A) a deduction from the cost of goods sold B) a component of the costs of good units manufacturedC) a "loss from normal spoilage account" in income statementD) a liability on a balance sheet An

26、swer: BDiff: 2Objective: 2AACSB: Analytical thinking4) Costs of abnormal spoilage are usually accounted for as _. A) a deduction from the cost of goods sold B) a component of the costs of good units manufacturedC) a separate line item in an income statement D) an asset on a balance sheet Answer: CDi

27、ff: 2Objective: 2AACSB: Analytical thinking5) The loss from abnormal spoilage account would appear _.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 Answer: CDif

28、f: 2Objective: 2AACSB: Analytical thinking6) 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 completedC) dividing total actual units started into production by

29、 the units of normal spoilageD) dividing total good units completed by the units of normal spoilageAnswer: BDiff: 2Objective: 2AACSB: Analytical thinking7) Companies that attempt to achieve zero defects in the manufacturing process treat spoilage as _.A) scrapB) reworked units C) abnormal spoilage D

30、) indirect spoilage Answer: CDiff: 2Objective: 2AACSB: Analytical thinking8) Which one of the following conditions usually exists when comparing normal and abnormal spoilage to controllability? Normal Spoilage Abnormal Spoilage A) ControllableControllable B) ControllableUncontrollable C) Uncontrolla

31、bleUncontrollable D) UncontrollableControllable Answer: DDiff: 2Objective: 2AACSB: Analytical thinking9) Which of the following statements is true of normal spoilage?A) It is a spoilage which is not inherent in a particular production process.B) It occurs due to machine breakdowns and operator error

32、s.C) It is usually regarded as avoidable and controllable.D) It arises even when the process is carried out in an efficient manner. Answer: DDiff: 2Objective: 2AACSB: Analytical thinking10) Which of the following statements is true of an abnormal spoilage?A) It is a spoilage which is inherent in a p

33、articular production process.B) It arises even when the process is carried out in an efficient manner. C) It is usually regarded as avoidable and controllable.D) The costs of abnormal spoilage are typically included as a component of the costs of good units manufactured.Answer: CDiff: 2Objective: 2A

34、ACSB: Analytical thinking11) 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 p

35、rocess 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 spoilag

36、e 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.Answer: ADiff: 2Objective: 2AACSB: Analytical thinking12) The costs of normal spoilage are typically included as a component

37、 of the costs of good units manufactured.Answer: TRUEDiff: 2Objective: 2AACSB: Analytical thinking13) Abnormal spoilage is spoilage inherent in a particular production process.Answer: FALSEExplanation: Normal spoilage is spoilage inherent in a particular production process.Diff: 2Objective: 2AACSB:

38、Analytical thinking14) Abnormal spoilage is spoilage that should arise under efficient operating conditions. Answer: FALSEExplanation: Abnormal spoilage should not arise under efficient operating conditions.Diff: 1Objective: 2AACSB: Analytical thinking15) Companies calculate the units of abnormal sp

39、oilage and record the cost in the Loss from Abnormal Spoilage account, which appears as a separate line item in an income statement.Answer: TRUEDiff: 2Objective: 2AACSB: Analytical thinking16) Spoilage can be considered either normal or abnormal. Answer: TRUEDiff: 1Objective: 2AACSB: Analytical thin

40、king17) Normal spoilage is spoilage that is NOT considered to be inherent in a production process. Answer: FALSEExplanation: Normal spoilage is spoilage that is considered to be inherent in a production process.Diff: 1Objective: 2AACSB: Analytical thinking18) Under efficient operating conditions, al

41、l spoilage is considered to be abnormal spoilage. Answer: FALSEExplanation: Normal spoilage is spoilage that is considered to be inherent in a production process. It arises even when the process is operated in an efficient manner.Diff: 1Objective: 2AACSB: Analytical thinking19) Normal spoilage rates

42、 are computed by dividing units of normal spoilage by total good units completed, NOT total actual units started in production.Answer: TRUEDiff: 2Objective: 2AACSB: Analytical thinking20) Costs of abnormal spoilage are separately accounted for as losses of the period. Answer: TRUEDiff: 2Objective: 2

43、AACSB: Analytical thinking21) There is a tradeoff between the speed of production and the normal spoilage rate.Answer: TRUEDiff: 2Objective: 2AACSB: Analytical thinking22) Normal spoilage is usually regarded as avoidable and controllable.Answer: FALSEExplanation: Abnormal spoilage is usually regarde

44、d as avoidable and controllable.Diff: 2Objective: 2AACSB: Analytical thinking23) Units spoiled due to machine breakdowns and operator errors are normal spoilage.Answer: FALSEExplanation: Units spoiled due to machine breakdowns and operator errors are abnormal spoilage.Diff: 2Objective: 2AACSB: Analy

45、tical thinking24) Line operators and other plant personnel generally can decrease or eliminate normal spoilage by identifying the reasons for machine breakdowns, operator errors.Answer: FALSEExplanation: Line operators and other plant personnel generally can decrease or eliminate abnormal spoilage b

46、y identifying the reasons for machine breakdowns, operator errors.Diff: 2Objective: 2AACSB: Analytical thinking25) Costs of abnormal spoilage are considered inventoriable and are written off as a period expense.Answer: FALSEExplanation: Costs of abnormal spoilage are not considered inventoriable and

47、 are not written off as a period expense. But it is true for normal spoilage.Diff: 2Objective: 2AACSB: Analytical thinking26) What are the objectives in accounting for spoilage? Answer: The key objectives in accounting for spoilage are determining the magnitude of the costs of the spoilage and disti

48、nguishing between the costs of normal and abnormal spoilage. To effectively manage a company (or a division of a business), a manager needs information concerning how his business is performing. Spoilage is a cost which should be controlled and minimized. The dimensions of the cost must be known (th

49、e dollar amount of the spoilage). The accounting system must be capable of determining the dollar amount of the spoilage costs while distinguishing between normal and abnormal spoilage. This information must be reported and available to management on a timely basis. Diff: 2Objective: 2AACSB: Analyti

50、cal thinking27) What is the distinction between normal and abnormal spoilage?Answer: Normal spoilage is inherent in a particular production process and arises when the process is done in an efficient manner. Abnormal spoilage, on the other hand, is not inherent in a particular production process and

51、 would not arise under efficient operating conditions. Abnormal spoilage is usually regarded as avoidable and controllable.Diff: 2Objective: 2AACSB: Analytical thinkingObjective 18.3Answer the following questions using the information below:Colil Computer Systems, Inc., manufactures printer circuit

52、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

53、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.1) What is the direct material cost per equivalent unit?A) $20.00B) $

54、30.00C) $25.00D) $35.00Answer: BExplanation: B) Cost to account for:$300,000Divided by equivalent units10,000Cost per equivalent unit$ 30.00Diff: 2Objective: 3AACSB: Application of knowledge2) What is the direct material cost assigned to good units completed? A) $150,000 B) $250,000 C) $120,000 D) $

55、270,000Answer: DExplanation: D) Cost to account for:$300,000Divided by equivalent units10,000Cost per equivalent unit$ 30.00Assigned to:Good units completed(5,000 × $30$ 150,000Normal spoilage(4,000 × $30)120,000Costs transferred out270,000Diff: 3Objective: 3AACSB: Analytical thinking3) Wh

56、at is the amount allocated to the work-in-process ending inventory? A) $40,000B) $50,000C) $30,000D) $75,000Answer: CExplanation: C) Cost to account for:$300,000Divided by equivalent units10,000Cost per equivalent unit$ 30.00Assigned to:Good units completed(5,000 × $30$ 150,000Normal spoilage(4,000 × $30)120,000Costs transferred out270,