成本与管理会计亨格瑞第13版英文版CA18.ppt

1、Spoilage, Rework, and Scrap,CHAPTER 18,Terminology,Spoilage, rework, and scrap have distinctive definitions in cost accounting that may not be the definition commonly used. P510（639） It is important that these terms be used properly, as each receives a different accounting treatment.,Terminology ,co

2、nts.,Spoilage is units of production that do not meet the specifications required by customers for good units and are discarded or sold at reduced prices. Rework is units of production that do not meet the specifications required by customers but are repaired and sold as good finished units. Spoiled

3、 units can be reworked ,but only at a considerable cost Scrap is residual material that results from manufacturing a product. It has low or zero sales value.,Spoilage,Different types of Spoilage P511（639） Spoilage is divided into two types: normal spoilage and abnormal spoilage. Normal spoilage is s

4、poilage inherent in the production process. It is viewed arising even in an efficient manufacturing process. Typically, normal spoilage is included as a part of the cost of good units manufactured. Units considered normal spoilage in a process-costing system are counted in computing completed units.

5、,Spoilage,conts.,Abnormal spoilage is spoilage that is not considered a part of the production process and does not arise under efficient operating conditions. Abnormal spoilage is regarded as avoidable and controllable. To highlight the abnormal spoilage ,companies calculate the units of abnormal s

6、poilage and record the cost in a “Loss from Abnormal Spoilage” account, which appears as a separate line item in the income statement. Some companies regard all spoilage as abnormal in order to make all spoilage visible.,Spoilage ,conts.,Illustration: in January 2008,mendonza incurs costs of $615000

7、 to produce 20500 units. of these 20500 units,20000 units are good units and 500 units are spoiled units. of 500 spoiled units,400 units are spoiled because the injection molding machine are unable to manufacture good casings 100% of the time. the remaining 100 units are spoiled because of machine b

8、reakdown and operation errors.,Spoilage ,conts.,Accounting for Spoilage,Accounting for spoilage aims to determine the magnitude of spoilage costs and to distinguish between costs of normal and abnormal spoilage To manage, control and reduce spoilage costs, they should be highlighted, not simply fold

9、ed into production costs,Spoilage ,conts.,The five-step procedure for process costing (discussed in Chapter 17) needs only slight modification to accommodate accounting for spoilage.P514(642) Step 1:Summarize the Flow of Physical Units of Output. Units of both normal and abnormal spoilage are identi

10、fied. Step 2:Compute Output in Terms of Equivalent Units. Include a calculation for equivalent units for spoilage.,Spoilage,conts.,The five-step procedure for process costing needs only slight modification to accommodate accounting for spoilage. Step 3:Summarize Total Costs to Account For. This is a

11、ll costs debited to the Work-in-Process account. Step 4:Compute Cost per Equivalent Unit. Step 5:Assign Total Costs to Units Completed, to Spoiled Units, and to Units in Ending Work-in-Process.,Spoilage,conts.,Accounting for spoilage in process costing using the FIFO or WA method is similar to the a

12、pproach discussed in the previous chapter. P515(643) Normal and abnormal units are treated as additional unit groups for which cost-per-equivalent-unit needs to be calculated and costs assigned. Spoilage costs are always considered to have occurred in the current period and are not included in the c

13、ost of ending work-in-process inventory.,Spoilage,conts.,Example P513(641),Spoilage,conts.,Example P513(641),Spoilage,conts.,P514(642),Spoilage,conts.,P516(644),WA Mehhod,Spoilage,conts.,P516(644),WA Method,Spoilage,conts.,P517(645),FIFO Method,Spoilage,conts.,P517(645),FIFO Method,Spoilage,conts.,A

14、ccounting for spoilage in process-costing systems using the standard-costing method is very similar to the standard-costing method discussed in the previous chapter. P518(646) The only difference is that the normal and abnormal units are treated as additional unit groups for which cost-per-equivalen

15、t-unit needs to be calculated and costs assigned.,Spoilage,conts.,Accounting for spoilage in process-costing systems using the standard-costing method is very similar to the standard-costing method discussed in the previous chapter. Costs are assigned to normal and abnormal spoilage units using stan

16、dard costs. As with the weighted-average and FIFO methods, the costs of normal spoilage are included in the total costs to account for and the costs assigned to units completed and transferred out.,Spoilage,conts.,P519(647),SC Method,Spoilage,conts.,P519(647),SC Method,Spoilage,conts.,The inspection

17、 point is the stage of completion at which products are examined to determine if they are acceptable units. P520(648) Spoilage is typically assumed to occur at the stage of completion where inspection takes place.,Spoilage,conts.,The concepts of normal and abnormal spoilage also apply to job-costing

18、 systems. Abnormal spoilage is a period cost and treated as an expense of the period in which it occurs. Normal spoilage is inventoriable and included as a cost of the product. Companies frequently distinguish between normal spoilage attributable to a specific job from normal spoilage common to all

19、jobs.,Spoilage,conts.,The concepts of normal and abnormal spoilage also apply to job-costing systems. P520(648) When normal spoilage is considered attributable to a specific job, that job bears the cost of the spoilage. When normal spoilage is considered attributable to all jobs, it is a characteris

20、tic of the production process and is allocated as a manufacturing overhead cost.,Spoilage,conts.,Rework,Units that are reworked are units that have been inspected and found to be unacceptable. However, these units are such that they can be repaired and sold as acceptable finished units. P522(650) No

21、rmal rework attributable to a specific job is charged to that job.,Rework,conts.,If it is normal rework common to all jobs, the costs are charged to manufacturing overhead and spread over all jobs. If the rework is considered abnormal, the costs of the rework are charged to a “Loss from Abnormal Rework” account.,Rework,conts.,Scrap,Scrap is the leftover material resulting from manufacturing a product. It has a low (or zero) sales value.P523(651) Two aspects of accounting for scrap are: Planning