Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
16th Edition
ISBN: 9780134475585
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
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Textbook Question
Chapter 18, Problem 18.28E
Recognition of loss from spoilage. Spheres Toys manufactures globes at its San Fernando facility. The company provides you with the following information regarding operations for April 2017:
| Total globes manufactured | 20,000 |
| Globes rejected as spoiled units | 750 |
| Total |
$800,000 |
Assume the spoiled units have no disposal value.
- 1. What is the unit cost of making the 20,000 globes?
Required
- 2. What is the total cost of the 750 spoiled units?
- 3. If the spoilage is considered normal, what is the increase in the unit cost of good globes manufactured as a result of the spoilage?
- 4. If the spoilage is considered abnormal, prepare the
journal entries for the spoilage Incurred.
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Students have asked these similar questions
Recognition of loss from spoilage. Spheres Toys manufactures globes at its San Fernando facility. The company provides you with the following information regarding operations for April 2017:
Total globes manufactured 20,000
Globes rejected as spoiled units 750
Total manufacturing cost $800,000
Assume the spoiled units have no disposal value.
Q. If the spoilage is considered normal, what is the increase in the unit cost of good globes manufactured as a result of the spoilage?
Recognition of loss from spoilage. Spheres Toys manufactures globes at its San Fernando facility. The company provides you with the following information regarding operations for April 2017:
Total globes manufactured 20,000
Globes rejected as spoiled units 750
Total manufacturing cost $800,000
Assume the spoiled units have no disposal value.
Q. IIf the spoilage is considered abnormal, prepare the journal entries for the spoilage incurred.
A company must decide between scrapping or reworking units that do not pass inspection. The company has 16,000 defective
units that have already cost $132,000 to manufacture. The units can be sold as scrap for $44,800 or reworked for $76,800 and
then sold for $131,200.
(a) Prepare a scrap or rework analysis of income effects.
(b) Should the company sell the units as scrap or rework them?
X Answer is complete but not entirely correct.
(a) Scrap or Rework Analysis
Scrap
Rework
Revenue from scrapped/reworked units
$
44,800
131,200
(76,800)
2$
Cost of reworked units
Income
$
44,800
54,400
Incremental income
$
6,400 X
(b) The company should:
Rework the units
Chapter 18 Solutions
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
Ch. 18 - Why is there an unmistakable trend in...Ch. 18 - Distinguish among spoilage, rework, and scrap.Ch. 18 - Normal spoilage is planned spoilage. Discuss.Ch. 18 - Costs of abnormal spoilage are losses. Explain.Ch. 18 - What has been regarded as normal spoilage in the...Ch. 18 - Units of abnormal spoilage are inferred rather...Ch. 18 - In accounting for spoiled units, we are dealing...Ch. 18 - Total input includes abnormal as well as normal...Ch. 18 - Prob. 18.9QCh. 18 - The unit cost of normal spoilage is the same as...
Ch. 18 - In job costing, the costs of normal spoilage that...Ch. 18 - The costs of rework are always charged to the...Ch. 18 - Abnormal rework costs should be charged to a loss...Ch. 18 - When is a company justified in inventorying scrap?Ch. 18 - How do managers use information about scrap?Ch. 18 - Prob. 18.16MCQCh. 18 - Which of the following is a TRUE statement...Ch. 18 - Healthy Dinners Co. produces frozen dinners for...Ch. 18 - Fresh Products, Inc. incurred the following costs...Ch. 18 - Normal and abnormal spoilage in units. The...Ch. 18 - Weighted-average method, spoilage, equivalent...Ch. 18 - Weighted-average method, assigning costs...Ch. 18 - FIFO method, spoilage, equivalent units. Refer to...Ch. 18 - FIFO method, assigning costs (continuation of...Ch. 18 - Weighted-average method, spoilage. LaCroix Company...Ch. 18 - FIFO method, spoilage. 1. Do Exercise 18-25 using...Ch. 18 - Spoilage, journal entries. Plastique produces...Ch. 18 - Recognition of loss from spoilage. Spheres Toys...Ch. 18 - Weighted-average method, spoilage. LogicCo is a...Ch. 18 - FIFO method, spoilage. Refer to the information in...Ch. 18 - Standard-costing method, spoilage. Refer to the...Ch. 18 - Spoilage and job costing. (L. Bamber) Barrett...Ch. 18 - Reworked units, costs of rework. Heyer Appliances...Ch. 18 - Scrap, job costing. The Russell Company has an...Ch. 18 - Weighted-average method, spoilage. World Class...Ch. 18 - FIFO method, spoilage. Refer to the information in...Ch. 18 - Weighted-average method, shipping department...Ch. 18 - FIFO method, shipping department (continuation of...Ch. 18 - Physical units, inspection at various levels of...Ch. 18 - Spoilage in job costing. Jellyfish Machine Shop is...Ch. 18 - Rework in job costing, journal entry (continuation...Ch. 18 - Scrap at time of sale or at time of production,...Ch. 18 - Physical units, inspection at various stages of...Ch. 18 - Weighted-average method, inspection at 80%...Ch. 18 - Job costing, classifying spoilage, ethics....
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Job Costing and Spoilage | Topic 2 | Spoilage, Re-work, and Scrap; Author: Samantha Taylor;https://www.youtube.com/watch?v=VP55_W2oXic;License: CC-BY