Spoilage, Rework, And Scrap

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The Manager and Management Accounting
An Introduction to Cost Terms and Purposes
Cost-Volume-Profit Analysis
Job Costing
Activity-Based Costing and Activity-Based Management
Master Budget and Responsibility Accounting
Flexible Budgets, Direct-Cost Variances, and Management Control
Flexible Budgets, Overhead Cost Variances, and Management Control
Inventory Costing and Capacity Analysis
Determining How Costs Behave
Decision Making and Relevant Information
Strategy, Balanced Scorecard, and Strategic Profitability Analysis
Pricing Decisions and Cost Management
Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis
Allocation of Support-Department Costs, Common Costs, and Revenues
Cost Allocation: Joint Products and Byproducts
Process Costing
Spoilage, Rework, and Scrap
Balanced Scorecard: Quality and Time
Inventory Management, Just-in-Time, and Simplified Costing Methods
Capital Budgeting and Cost Analysis
Management Control Systems, Transfer Pricing, and Multinational Considerations
Performance Measurement, Compensation, and Multinational Considerations

All Questions

Question 1

Free

Multiple Choice

Which of the following defines spoilage?

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units of production that do not meet the specifications required by customers but that are subsequently repaired and sold as good finished units

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 prices

residual material that results from manufacturing a product

products of a joint production process that have low total sales values relative to the total sales value of the main product

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Question 2

Free

Multiple Choice

Which of the following describes rework?

Choose correct answer/s

units of production that do not meet the specifications required by customers but that are subsequently repaired and sold as good finished units

products of a joint production process that have low total sales values relative to the total sales value of the main product

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 prices

residual material that results from manufacturing a product

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Question 3

Free

Multiple Choice

Which of the following is an example of spoilage?

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short lengths from woodworking operations that cannot be used to make another product

edges from plastic molding operations that result from the main product's manufacturing process but have little or no value

defective units of laptops detected after the production process but reworked before the units are sold as good products to customers

defective men's button down cotton collar dress shirts that have small pulls in the material and must be sold as discounted "seconds" in the factory store

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Question 4

Free

Multiple Choice

Which of the following best describes scrap?

Choose correct answer/s

units of production that do not meet the specifications required by customers but that are subsequently repaired and sold as good finished units

products of a joint production process that have low total sales values relative to the total sales value of the main product

residual material that results from manufacturing a product

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 prices

Check answer

Question 5

Free

Multiple Choice

A leather shoe manufacturer makes "duck" boots that consist of leather and rubber. Some of the books are defective and are sold in the factory store at deep discounts. Leather strips from the cutting process and rubber shavings are byproducts of the process. The leather strips have no use and are discarded while the rubber scraps are collected and periodically picked up by a recycling company at no cost to the shoe manufacturer. Which of the following classifications of these items would be accurate?

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the defective boots are spoilage and the leather and the rubber are scrap

the defective boots, leather and rubber are scrap but the shoes are more valuable scrap as they can be sold

the defective boots are spoilage , the leather strips are scrap, and the rubber is rework

all three items are spoilage

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Question 6

Multiple Choice

Which of the following is an example of scrap?

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short lengths from woodworking operations that must be discarded

defective units of laptops detected after the production process but reworked before the units are sold as good products to customers

defective aluminum cans sold to aluminum manufacturers for remelting to produce other aluminum products

defective shirts, jeans, shoes, and carpeting sold as seconds

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Question 7

True/False

Some amounts of spoilage, rework, or scrap are inherent in many production processes.

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True

False

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Question 8

True/False

An item classified as spoilage has no value.

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True

False

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Question 9

True/False

Reworked goods are unacceptable units of production usually NOT capable of being repaired or converted into a salable product.

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True

False

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Question 10

True/False

Rework is finished production that is NOT in accordance with customer desires. The product is redone and sold as finished goods.

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True

False

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Question 11

True/False

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.

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True

False

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Question 12

True/False

Scrap and rework are considered to be the same thing by managerial accountants.

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True

False

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Question 13

True/False

There is no difference between scrap which can be sold for relatively small amount and a byproduct.

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True

False

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Question 14

Essay

Distinguish among spoilage, reworked units, and scrap. Give an example of each.

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Question 15

Essay

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 that are discarded
c.Edges from plastic moldings that is a low value byproduct
d.Carpets sold as seconds in a factory outlet at a deep discount
e.Precision tools that are not built successfully 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

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Question 16

Multiple Choice

Spoilage that is an inherent result of the particular production process and arises even under efficient operating conditions is referred to as ________ .

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incremental spoilage

normal spoilage

irregular spoilage

direct spoilage

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Question 17

Multiple Choice

Spoilage that is not inherent in a particular production process and would not arise under efficient operating conditions is referred to as ________ .

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incremental spoilage

usual spoilage

abnormal spoilage

indirect spoilage

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Question 18

Multiple Choice

Costs of normal spoilage are usually accounted for as ________ .

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a deduction from the cost of goods sold

a component of the costs of good units manufactured

a "loss from normal spoilage account" in income statement

a liability on a balance sheet

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Question 19

Multiple Choice

Costs of abnormal spoilage are usually accounted for as ________ .

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a deduction from the cost of goods sold

a component of the costs of good units manufactured

a separate line item in an income statement

an asset on a balance sheet

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Question 20

Multiple Choice

The loss from abnormal spoilage account would appear ________ .

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on a balance sheet

as a detailed item in the retained earnings schedule of a balance sheet

a separate line item on an income statement

a deduction from the cost of goods sold

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