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Cost Accounting 101 Practice Test: Spoilage, Rework, and Scrap
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Avg score: 56% • Most missed: “Scrap is residual material that results from manufacturing a product. and can ha…”
Spoilage can occur at any stage of the production process.  Rework: Rework is unacceptable units of production that are subsequently repaired and sold as acceptable finished goods.  Scrap: Scrap is material left over when making a product. Spoilage should not be confused with scrap. Scrap arises at the initial stages of production operations whereas spoilage takes place more towards the finishing production stages with larger loss of added value to the cost of material used. The decision to scrap or rework an item depends on its incremental benefits. If the reworked units yield a greater... Show more
Cost Accounting 101 Practice Test: Spoilage, Rework, and Scrap
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25 Questions

1. A production process which involves spoilage and rework occurs in:
2. Unacceptable units of production that are subsequently repaired and sold as acceptable finished goods are:
3. Normal spoilage should be computed using as the base the:
4. Which of the following is NOT a major consideration when accounting for scrap?
5. Recognition of spoiled units when computing output units:
6. Companies that attempt to achieve zero defects in the manufacturing process treat spoilage as:
7. Managers often cite reductions in the costs of spoilage as a(n):
8. If scrap is returned to the company's storeroom and inventoried, it should NOT have any value in the accounting records.
9. Unacceptable units of production that are discarded or sold for reduced prices are referred to as:
10. In general, it is presumed that normal spoilage occurs halfway between the beginning of the production process and the inspection point in the production cycle. This is because there is no easy way to determine where the spoilage has happened until the inspection has occurred.
11. An item classified as spoilage has no value.
12. Material left over when making a product is referred to as:
13. Scrap and rework are considered to be the same thing by managerial accountants.
14. Normal Spoilage Abnormal Spoilage"
15. Companies calculate the units of abnormal spoilage and record the cost in the Loss from Abnormal Spoilage account, which appears as a separate line item in the income statement.
16. When rework is normal and NOT attributable to a specific job, the costs of rework are charged to manufacturing overhead and are spread, through overhead allocation, over all jobs.
17. Costs of poor quality production include the:
18. Scrap is usually divided between normal and abnormal scrap.
19. Under the FIFO method, all spoilage costs are assumed to be related to the units:
20. Under standard costing, there is no need to calculate a cost per equivalent unit.
21. A company might consider all spoilage to be abnormal if it wants to pay serious attention to the problem.
22. Normal spoilage is spoilage that is NOT considered to be inherent in a production process.
23. Costs of abnormal spoilage are usually accounted for as:
24. To simplify calculations under FIFO, spoiled units are accounted for as if they were started in the current period.
25. Under the FIFO method, all spoilage costs are assumed to be related to the units completed during this period using the unit costs of the current period.

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