In a Process Costing System, Which Assumes That Normal Spoilage

question 9

Multiple Choice

In a process costing system, which assumes that normal spoilage occurs at the end of a process, the cost attributable to normal spoilage should be assigned to:

• A)Beginning work-in-process inventory.
• B)Ending work-in-process inventory.
• C)Cost of goods manufactured and ending work-in-process inventory in the ratio of units worked on during the period to units remaining in work-in-process inventory.
• D)Cost of goods manufactured (transferred out).
• E)A separate loss account in order to highlight production inefficiencies.

---

Definitions:

Voting Equity Interests

Shares or stock in a company that grant the holder the right to vote on corporate matters, like electing the board of directors.

Consolidated Financial Statements

Financial statements that aggregate the financial position, results of operations, and cash flows of a parent company and its subsidiaries into one document, as if the group was a single entity.

Acquisition Method

An accounting procedure used in consolidating the financial statements of a parent company and its subsidiaries, focusing on the fair value of acquired assets and liabilities.

Purchase Method

An accounting method used in business combinations where the acquirer's assets, liabilities, and contingent liabilities are recorded at their fair values at the acquisition date.