costaccttestbankchapter18.doc

Cost Accounting, 14e (Horngren/Datar/Rajan) Chapter 18 Spoilage, Rework, and Scrap Objective 18.1 1) Managers often cite reductions in the costs of spoilage as a(n): A) major justification for implementing a just-in-time production system B) measurement of improved output quality C) immaterial item that is not to be tracked D) indication of improvement in the accounting system Answer: A Diff: 2 Terms: spoilage Objective: 1 AACSB: Analytical skills 2) Unacceptable units of production that are discarded or sold for reduced prices are referred to as: A) reworked units B) spoilage C) scrap D) defective units Answer: B Diff: 1 Terms: spoilage Objective: 1 AACSB: Ethical reasoning 3) Unacceptable units of production that are subsequently repaired and sold as acceptable finished goods are: A) reworked units B) spoilage C) scrap D) defective units Answer: A Diff: 1 Terms: rework Objective: 1 AACSB: Reflective thinking 4) Costs of poor quality production include the: A) opportunity cost of the plant and workers B) effect on current customers C) effect on potential customers D) All of these answers are correct. Answer: D Diff: 2 Terms: spoilage Objective: 1 AACSB: Reflective thinking 5) Material left over when making a product is referred to as: A) reworked units B) spoilage C) scrap D) defective units Answer: C Diff: 1 Terms: scrap Objective: 1 AACSB: Reflective thinking 6) A production process which involves spoilage and rework occurs in: A) the manufacture of high precision tools B) semiconductor units C) the manufacture of clothing D) All of these answers are correct. Answer: A Diff: 2 Terms: spoilage, rework Objective: 1 AACSB: Reflective thinking 7) Some amounts of spoilage, rework, or scrap are inherent in many production processes. Answer: TRUE Diff: 2 Terms: spoilage Objective: 1 AACSB: Analytical skills 8) An item classified as spoilage has no value. Answer: FALSE Explanation: Although the