Reference no: EM133050051
Problem - Normal and abnormal spoilage in units - The following data, in physical units, describe a grinding process for January:
Work in process, Beginning 19,000
Started during current period 150,000
To account for 169,000
Spoiled units 12,000
Good units completed and transferred out 132,000
Work in process, ending 25,000
Accounted for 169,000
Inspection occurs at the 100% completion stage. Normal spoilage is 5% of the good units passing inspection.
Required -
1. Compute the normal and abnormal spoilage in units.
2. Assume that the equivalent-unit cost of a spoiled unit is $10. Compute the amount of potential savings if all spoilage were eliminated, assuming that all other costs would be unaffected. Comment on your answer.