Homework Help is Here – Start Your Trial Now!
Business
Accounting
Question 3 a) What do you mean by scrap? Will scrap increase cost per unit? Why or why not?

Question 3 a) What do you mean by scrap? Will scrap increase cost per unit? Why or why not?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question

Don’t provide incomplete /wrong/unclear format of answer.  

Question 3 a) What do you mean by scrap? Will scrap increase cost per unit? Why or why not? b) Ginger Mechanicals applies process costing as it produces a single product in large volume. The process line (partial) for Melting Department is given below: 62,000 3,000 6,000 58,000 Units Units Units Units 0% 20% 30% 40% 50% 70% 80% 100% DM DL IP 1 IP 2 ОН Other Information: At 20%, we have beginning inventory and at 70%, we have ending inventory. At 50%, a total of 66,000 units were inspected for rework. 2% of the units inspected are considered as normal rework. At 80%, we have inspection point for spoilage. 1% of input is considered as normal spoilage. However, spoiled units can be scrapped at $3 per unit. Costs per equivalent unit data are given below: Material Labor Overhead Cost per equivalent unit $8 $5 $3 Required: i) Compute equivalent units for normal rework and normal spoilage. ii) Compute cost of normal rework and show the shifting. iii) Compute cost of normal spoilage and show the shifting.
Transcribed Image Text:Question 3 a) What do you mean by scrap? Will scrap increase cost per unit? Why or why not? b) Ginger Mechanicals applies process costing as it produces a single product in large volume. The process line (partial) for Melting Department is given below: 62,000 3,000 6,000 58,000 Units Units Units Units 0% 20% 30% 40% 50% 70% 80% 100% DM DL IP 1 IP 2 ОН Other Information: At 20%, we have beginning inventory and at 70%, we have ending inventory. At 50%, a total of 66,000 units were inspected for rework. 2% of the units inspected are considered as normal rework. At 80%, we have inspection point for spoilage. 1% of input is considered as normal spoilage. However, spoiled units can be scrapped at $3 per unit. Costs per equivalent unit data are given below: Material Labor Overhead Cost per equivalent unit $8 $5 $3 Required: i) Compute equivalent units for normal rework and normal spoilage. ii) Compute cost of normal rework and show the shifting. iii) Compute cost of normal spoilage and show the shifting.
Expert Solution
steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Accounting Changes and Error Analysis
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS