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18: CHAPTER SPOILAGE, REWORKED UNITS, AND SCRAP TRUE/FALSE 1. Reducing defects helps to reduce costs, but does not make the business more competitive. Answer: False Difficulty: 2 Reducing defects does make the business more competitive. 2. Objective: 1 Reworked goods are unacceptable units of production usually not capable of being repaired or converted into a salable product. Answer: False Difficulty: 2 Objective: 1 Reworked goods are unacceptable units of production that can be repaired into a salable product. 3. The value of scrap material can have either a high or low sales value relative to the product with which it is associated. Answer: False Difficulty: 2 Scrap material by definition has a low sales value. Objective: 1 4. Normal spoilage adds to the cost of the job to which it is attributed in a job order costing system. Answer: True Difficulty: 2 Objective: 2 5. When calculating normal spoilage rates, the base should be actual units started in production. Answer: False Difficulty: 2 The base should be good units started into production. Objective: 2 6. Abnormal spoilage is spoilage that should arise under efficient operating conditions. Answer: False Difficulty: 2 Objective: Abnormal spoilage should not arise under efficient operating conditions. 2 7. A company whose goal is zero defects would usually treat all spoilage as abnormal. Answer: True Difficulty: 2 Objective: 2 8. Counting spoiled units as part of output units in a process-costing system usually results in a higher cost per unit. Answer: False Difficulty: 3 Objective: Counting spoiled units usually results in a lower cost per unit. Chapter 18 Page 1 3 9. Costs in…...

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