BAC2624 Topic 5

Which of the following defines spoilage?

• 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

Which of the following is an example of scrap?

• 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

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

• incremental spoilage

• normal spoilage

• irregular spoilage

• direct spoilage

Costs of abnormal spoilage are usually accounted for as ________.

• 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

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

• Normal is Controllable and Abnormal is Controllable

• Normal is Controllable and Abnormal is Uncontrollable

• Normal is Uncontrollable and Abnormal is Uncontrollable

• Normal is Uncontrollable and Abnormal is Controllable