SPOILAGE, REWORKED UNITS, AND SCRAP mcq

MULTIPLE CHOICE

21. Managers often cite reductions in the costs of spoilage as a(n)

a. major justification for implementing a just-in-time production system.

b. measurement of improved output quality.

c. immaterial item that is not to be tracked.

d. indication of improvement in the accounting system.

22. Unacceptable units of production that are discarded or are sold for reduced prices are referred to as

a. reworked units.

b. spoilage.

c. scrap.

d. defective units.

23. Unacceptable units of production that are subsequently repaired and sold as acceptable finished goods are

a. reworked units.

b. spoilage.

c. scrap.

d. defective units.

24. Costs of poor quality production include

a. the opportunity cost of the plant and workers.

b. the effect on current customers.

c. the effect on potential customers.

d. all of the above are costs of poor quality production.

25. Material left over when making a product is referred to as

a. reworked units.

b. spoilage.

c. scrap.

d. defective units.

26. A production process which involves spoilage and rework occurs in

a. the manufacture of high precision tools.

b. semiconductor units.

c. the manufacture of clothing.

d. all of the above involve spoilage and rework.

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

a. ordinary spoilage.

b. normal spoilage.

c. abnormal spoilage.

d. there is no special term for this type of spoilage.

28. Spoilage that should not arise under efficient operating conditions is referred to as

a. ordinary spoilage.

b. normal spoilage.

c. abnormal spoilage.

d. there is no special term for this type of spoilage.

29. Costs of normal spoilage are usually accounted for as

a. part of the cost of goods sold.

b. part of the cost of goods manufactured.

c. a separate line item in the income statement.

d. an asset in the balance sheet.

30. Costs of abnormal spoilage are usually accounted for as

a. part of the cost of goods sold.

b. part of the cost of goods manufactured.

c. a separate line item in the income statement.

d. an asset in the balance sheet.

31. The loss from abnormal spoilage account would not appear

a. on the balance sheet.

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

c. as a detailed item on the income statement.

d. on either (a) or (b).

32. Normal spoilage should be computed using as the base

a. total units completed.

b. total good units completed.

c. total actual units started into production.

d. none of the above.

33. Companies that attempt to achieve zero defects in the manufacturing process treat spoilage as

a. scrap.

b. reworked units.

c. abnormal spoilage.

d. normal spoilage.

34. Which one of the following conditions usually exists when comparing normal and abnormal spoilage to controllability?

Normal Spoilage Abnormal Spoilage

a. Controllable Controllable

b. Controllable Uncontrollable

c. Uncontrollable Uncontrollable

d. Uncontrollable Controllable

35. Not counting spoiled units in the equivalent-unit calculation results in

a. lower cost per good unit.

b. higher cost per good unit.

c. better management information.

d. both (a) and (c).

36. Recognition of spoiled units when computing output units

a. highlights the costs of normal spoilage to management.

b. distorts the accounting data.

c. focuses management’s attention on reducing spoilage.

d. results in both (a) and (c).

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