ACCT 3201 Cost Accounting: A Managerial Emphasis, 16e (Horngren) Chapter 18 Spoilage, Rework, and Scrap
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Course
ACCT 3201
Institution
University Of Minnesota, Duluth
1) Which of the following defines spoilage?
A) units of production that do not meet the specifications required by customers but that
are subsequently repaired and sold as good finished units
B) units of production whether fully or partially completed, that do not meet the
specifications requir...
1 which of the following defines spoilage a units of production that do not meet the specific
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University Of Minnesota, Duluth
ACCT 3201
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Cost Accounting: A Managerial Emphasis, 16e (Horngren)
Chapter 18 Spoilage, Rework, and Scrap
18.1 Objective 18.1
1) Which of the following defines spoilage?
A) units of production that do not meet the specifications required by customers but that
are subsequently repaired and sold as good finished units
B) 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
C) residual material that results from manufacturing a product
D) products of a joint production process that have low total sales values relative to the
total sales value of the main product
Answer: B
Diff: 2
Objective: 1
AACSB: Analytical thinking
2) Which of the following describes rework?
A) units of production that do not meet the specifications required by customers but that
are
subsequently repaired and sold as good finished units
B) products of a joint production process that have low total sales values relative to the
total sales value of the main product
C) 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
D) residual material that results from manufacturing a product
Answer: A
Diff: 2
Objective: 1
AACSB: Analytical thinking
3) Which of the following is an example of spoilage?
A) short lengths from woodworking operations that cannot be used to make another
product
B) edges from plastic molding operations that result from the main product's
manufacturing process but have little or no value
C) defective units of laptops detected after the production process but reworked before the
units are sold as good products to customers
D) 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
Answer: D
Diff: 2
Objective: 1
AACSB: Analytical thinking
,4) Which of the following best describes scrap?
A) units of production that do not meet the specifications required by customers but that
are
subsequently repaired and sold as good finished units
B) products of a joint production process that have low total sales values relative to the
total sales
value of the main product
C) residual material that results from manufacturing a product
D) 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
Answer: C
Diff: 2
Objective: 1
AACSB: Analytical thinking
5) 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?
A) the defective boots are spoilage and the leather and the rubber are scrap
B) the defective boots, leather and rubber are scrap but the shoes are more valuable scrap
as they can be sold
C) the defective boots are spoilage , the leather strips are scrap, and the rubber is rework
D) all three items are spoilage
Answer: A
Diff: 2
Objective: 1
AACSB: Analytical thinking
6) Which of the following is an example of scrap?
A) short lengths from woodworking operations that must be discarded
B) defective units of laptops detected after the production process but reworked before the
units are sold as good products to customers
C) defective aluminum cans sold to aluminum manufacturers for remelting to produce
other aluminum products
D) defective shirts, jeans, shoes, and carpeting sold as seconds
Answer: A
Diff: 2
Objective: 1
AACSB: Analytical thinking
7) Some amounts of spoilage, rework, or scrap are inherent in many production processes.
Answer: TRUE
Diff: 2
Objective: 1
AACSB: Analytical thinking
,8) An item classified as spoilage has no value.
Answer: FALSE
Explanation: Although the item does not meet the specifications, it may be sold as a
"second" or for its scrap value. It is not necessarily thrown out.
Diff: 2
Objective: 1
AACSB: Analytical thinking
9) Reworked goods are unacceptable units of production usually NOT capable of being
repaired or converted into a salable product.
Answer: FALSE
Explanation: Rework is units of production that do not meet the specifications required by
customers but that are subsequently repaired and sold as good finished units.
Diff: 2
Objective: 1
AACSB: Analytical thinking
10) Rework is finished production that is NOT in accordance with customer desires. The
product is redone and sold as finished goods.
Answer: TRUE
Diff: 2
Objective: 1
AACSB: Analytical thinking
11) 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: FALSE
Explanation: Scrap is residual material that 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: 2
Objective: 1
AACSB: Analytical thinking
12) Scrap and rework are considered to be the same thing by managerial accountants.
Answer: FALSE
Explanation: Scrap and rework are not considered to be the same thing by managerial
accountants.
Diff: 2
Objective: 1
AACSB: Analytical thinking
13) There is no difference between scrap which can be sold for relatively small amount and
a byproduct.
Answer: FALSE
Explanation: 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: 2
Objective: 1
AACSB: Analytical thinking
, 14) Distinguish among spoilage, reworked units, 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 unacceptable 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 sometimes 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: 2
Objective: 1
AACSB: Analytical thinking
15) 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
Answer:
a. spoilage
b. scrap
c. scrap
d. spoilage
e. spoilage and rework
f. scrap
g. spoilage (usually too complex to rework)
Diff: 2
Objective: 1
AACSB: Analytical thinking
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