chap18 - David Franz, 2012 Chapter 18 Spoilage, Rework, and...

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© David Franz, 2012 Chapter 18 Spoilage, Rework, and Scrap I. Terms A. Spoilage is unacceptable production that is thrown away or sold for disposal value B. Rework is units of unacceptable production that are repaired (reworked) and sold as good finished goods C. Scrap is left-over material with minimal or zero sales value II. Spoilage A. Normal spoilage: expected as part of the manufacturing process. Add costs to inventory B. Abnormal Spoilage is not expected, it is assumed to be controllable and expensed as incurred. Debit Loss from Abnormal Spoilage/ Credit WIP C. Process costing and spoilage: Assume normal spoilage occurs at the inspection point so materials and conversion costs are added up to the inspection point. 1. Count all spoiled units when computing equivalent units with the cost of normal spoilage units added to costs of good units transferred out. 2. Impact of inspections at different stages of production: Normal spoilage can be added to goods units in ending WIP if they have passed the
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chap18 - David Franz, 2012 Chapter 18 Spoilage, Rework, and...

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