ACCO 330 - CHPT 16 - Course 5 - TK

Acco 330 cost accounting process costing with

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ACCO 330 – Cost Accounting Process Costing with Spoilage and Rework 4 3. Zero-Defect Policy The assumption that defects are avoidable has been questioned Some firms are adopting a zero-defect policy every unit is expected to be a good unit Advocates argue that a zero-defect policy lead to higher quality products and lower unit costs as standards are higher Any spoilage or rework is accounted as a loss Greatly simplifies the accounting process
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ACCO 330 – Cost Accounting Process Costing with Spoilage and Rework 5 4. Production Cost Report Step I: Reconcile the output/effort; Identify the normal & abnormal spoilage Step II: Equivalent units Spoilage; time when spoilage occurs Rework; based on amount of work required
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ACCO 330 – Cost Accounting Process Costing with Spoilage and Rework 6 4. Production Cost Report Step V: Cost allocation General rule: Normal spoilage and rework are re- distributed to the physical units that survive inspection Normal spoilage are re-distributed to goods completed and/or ending wip inventory Normal rework costs are re-distributed to goods completed and/or ending wip inventory and spoiled units
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ACCO 330 – Cost Accounting Process Costing with Spoilage and Rework 7 1. A A. A A A
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