Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins

Exercise 25

Abnormal spoilage is 100 units and normal spoilage is 400 units. Beginning work-in-process inventory consisted of 5,000 units; 20,000 units were started; and 22,000 units were completed this period. How many units are in ending work-in-process?

Step 1 of 3

Spoilage:

Spoilage refers to the waste or scrap arises during a production period. It is generally related to the raw material used in the production. Spoilage can be normal spoilage and abnormal spoilage.

Normal Spoilage:

It means expected level of spoilage in a production process. Some percent of spoilage is expected during a process caused by production.

Abnormal Spoilage:

It refers to the unexpected spoilage during the production process. It is more than the natural process of production.

However, both normal and abnormal spoilage results in reduction of number of units.