Answered: During the production process, company…

During the production process, company incurred normal spoilage and abnormal loss. Such losses are added to _______________________. a. Cost of goods sold b. Production cost c.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter7: Variable Costing For Management analysis

Section: Chapter Questions

Problem 2DQ: Which type of manufacturing cost (direct materials, direct labor, variable factory overhead, fixed...

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Concept explainers

Inventory Accounting

Inventory accounting is that branch of accounting that helps in determining the specific value of assets at different stages of production and development.

Question

During the production process, company incurred normal spoilage and abnormal loss. Such losses are added to _______________________.

Cost of goods sold

Production cost

Process cost

Finished goods

Clear my choice

Definition Definition Operation costing method employed to determine the value of a product at each process or stage of the production process, applicable where goods produced from a series of continuous operations or procedure. Process costing is employed by businesses that manufacture goods and where production is in repetitive inflow.

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As goods are transferred from a prior process to a subsequent process, the following entry to record the cost of abnormal spoilage would be made: a. debit Work in Process (subsequent department) and credit Work in Process (prior department) b. debit Abnormal Spoilage Loss and credit Work in Process (prior department) c. debit Finished Goods and credit Work in Process (prior department) d. debit Finished Goods and credit Abnormal Loss
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mcqs Which of the following is correct with respect to closing out overapplied manufacturing overhead to Cost of Goods Sold versus closing it out to Work-in-Process Inventory, Finished Goods Inventory, and Cost of Goods Sold? a The balance in the Work-in-Process account after allocation will be higher if the overapplied overhead is closed out by allocating it to all appropriate accounts. b Cost of Goods Sold will be lower if the overapplied overhead is closed out by allocating it to the inventory accounts as well as to Cost of Goods Sold. c Operating income will be higher if all of the overapplied overhead is closed out to Cost of Goods Sold. d The balance in the Work-in-Process account after allocation will be the same under either method.