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
1
Copyright © 2012 Pearson Education, Inc.
,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 item does not meet the specifications, it may be sold as a "second" or for its
scrap value. It is not necessarily thrown out.
Diff: 2
Terms: spoilage
Objective: 1
AACSB: Analytical skills
9) Reworked goods are unacceptable units of production usually NOT capable of being repaired or
converted into a salable product.
Answer: FALSE
Explanation: Rework is units of production that do not meet the specifications required by customers
but that are subsequently repaired and sold as good finished units.
Diff: 2
Terms: rework
Objective: 1
AACSB: Ethical reasoning
2
Copyright © 2012 Pearson Education, Inc.
,10) Rework is finished production that is NOT in accordance with customer desires. The product is
redone and sold as finished goods.
Answer: TRUE
Diff: 2
Terms: rework
Objective: 1
AACSB: Ethical reasoning
11) Scrap is residual material that results from manufacturing a product. and can have either a high or
low sales value relative to the product with which it is associated.
Answer: FALSE
Explanation: Scrap is residual material that results from manufacturing a product. Examples are short
lengths from woodworking operations, edges from plastic molding operations, and frayed cloth and end
cuts from suit-making operations. Scrap can sometimes be sold for relatively small amounts.
Diff: 2
Terms: scrap
Objective: 1
AACSB: Analytical skills
12) Scrap and rework are considered to be the same thing by managerial accountants.
Answer: FALSE
Explanation: Scrap and rework are not considered to be the same thing by managerial accountants.
Diff: 2
Terms: scrap, rework
Objective: 1
AACSB: Analytical skills
13) Distinguish among spoilage, reworked units, and scrap. Give an example of each.
Answer: Spoilage refers to unacceptable units of production that are discarded or are sold for reduced
prices. Both partially completed or fully completed units of output can be spoiled. Examples are
defective clothes sold as seconds.
Reworked units are unacceptable units of production that are subsequently repaired and sold as
acceptable finished goods. Defective units of product (such as pagers, computer disk drives, computers,
and telephones) detected during production or immediately after production but before units are shipped
to customers, can sometimes be reworked and sold as good products.
Scrap is material left over when making a product. It has low sales value compared with the sales value
of the product. Examples are shavings and short lengths from woodworking operations and edges left
over from plastic molding operations.
Diff: 1
Terms: spoilage, rework, scrap
Objective: 1
AACSB: Reflective thinking
3
Copyright © 2012 Pearson Education, Inc.
, 14) For each of the following items identify whether it is spoilage, reworked units, or scrap.
________ a. Defective jeans sold as seconds
________ b. Shavings
________ c. Edges from plastic moldings
________ d. Carpets sold as seconds
________ e. Precision tools that are not built successfully to the necessary tolerance,
but which can be successfully converted to a saleable product
________ f. Rock extracted as a result of mining processing
________ g. Complex defective products such as semiconductors
Answer:
a. spoilage
b. scrap
c. scrap
d. spoilage
e. spoilage and rework
f. scrap
g. spoilage (usually too complex to rework)
Diff: 2
Terms: spoilage, rework, scrap
Objective: 1
AACSB: Ethical reasoning
Objective 18.2
1) Spoilage that is an inherent result of the particular production process and arises under efficient
operating conditions is referred to as:
A) ordinary spoilage
B) normal spoilage
C) abnormal spoilage
D) None of these answers is correct.
Answer: B
Diff: 2
Terms: normal spoilage
Objective: 2
AACSB: Reflective thinking
2) Spoilage that should NOT arise under efficient operating conditions is referred to as:
A) ordinary spoilage
B) normal spoilage
C) abnormal spoilage
D) None of these answers is correct.
Answer: C
Diff: 2
Terms: abnormal spoilage
Objective: 2
AACSB: Reflective thinking
4
Copyright © 2012 Pearson Education, Inc.
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
1
Copyright © 2012 Pearson Education, Inc.
,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 item does not meet the specifications, it may be sold as a "second" or for its
scrap value. It is not necessarily thrown out.
Diff: 2
Terms: spoilage
Objective: 1
AACSB: Analytical skills
9) Reworked goods are unacceptable units of production usually NOT capable of being repaired or
converted into a salable product.
Answer: FALSE
Explanation: Rework is units of production that do not meet the specifications required by customers
but that are subsequently repaired and sold as good finished units.
Diff: 2
Terms: rework
Objective: 1
AACSB: Ethical reasoning
2
Copyright © 2012 Pearson Education, Inc.
,10) Rework is finished production that is NOT in accordance with customer desires. The product is
redone and sold as finished goods.
Answer: TRUE
Diff: 2
Terms: rework
Objective: 1
AACSB: Ethical reasoning
11) Scrap is residual material that results from manufacturing a product. and can have either a high or
low sales value relative to the product with which it is associated.
Answer: FALSE
Explanation: Scrap is residual material that results from manufacturing a product. Examples are short
lengths from woodworking operations, edges from plastic molding operations, and frayed cloth and end
cuts from suit-making operations. Scrap can sometimes be sold for relatively small amounts.
Diff: 2
Terms: scrap
Objective: 1
AACSB: Analytical skills
12) Scrap and rework are considered to be the same thing by managerial accountants.
Answer: FALSE
Explanation: Scrap and rework are not considered to be the same thing by managerial accountants.
Diff: 2
Terms: scrap, rework
Objective: 1
AACSB: Analytical skills
13) Distinguish among spoilage, reworked units, and scrap. Give an example of each.
Answer: Spoilage refers to unacceptable units of production that are discarded or are sold for reduced
prices. Both partially completed or fully completed units of output can be spoiled. Examples are
defective clothes sold as seconds.
Reworked units are unacceptable units of production that are subsequently repaired and sold as
acceptable finished goods. Defective units of product (such as pagers, computer disk drives, computers,
and telephones) detected during production or immediately after production but before units are shipped
to customers, can sometimes be reworked and sold as good products.
Scrap is material left over when making a product. It has low sales value compared with the sales value
of the product. Examples are shavings and short lengths from woodworking operations and edges left
over from plastic molding operations.
Diff: 1
Terms: spoilage, rework, scrap
Objective: 1
AACSB: Reflective thinking
3
Copyright © 2012 Pearson Education, Inc.
, 14) For each of the following items identify whether it is spoilage, reworked units, or scrap.
________ a. Defective jeans sold as seconds
________ b. Shavings
________ c. Edges from plastic moldings
________ d. Carpets sold as seconds
________ e. Precision tools that are not built successfully to the necessary tolerance,
but which can be successfully converted to a saleable product
________ f. Rock extracted as a result of mining processing
________ g. Complex defective products such as semiconductors
Answer:
a. spoilage
b. scrap
c. scrap
d. spoilage
e. spoilage and rework
f. scrap
g. spoilage (usually too complex to rework)
Diff: 2
Terms: spoilage, rework, scrap
Objective: 1
AACSB: Ethical reasoning
Objective 18.2
1) Spoilage that is an inherent result of the particular production process and arises under efficient
operating conditions is referred to as:
A) ordinary spoilage
B) normal spoilage
C) abnormal spoilage
D) None of these answers is correct.
Answer: B
Diff: 2
Terms: normal spoilage
Objective: 2
AACSB: Reflective thinking
2) Spoilage that should NOT arise under efficient operating conditions is referred to as:
A) ordinary spoilage
B) normal spoilage
C) abnormal spoilage
D) None of these answers is correct.
Answer: C
Diff: 2
Terms: abnormal spoilage
Objective: 2
AACSB: Reflective thinking
4
Copyright © 2012 Pearson Education, Inc.
