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.

Question

Quizplus · Accepted Answer

Normal spoilage costs are typically included in the cost of goods manufactured because they are considered a part of the manufacturing process costs. This means that the costs associated with normal spoilage are spread over the units that are completed and transferred out of the process, rather than being assigned to the work-in-process inventory or highlighted as a separate loss.

In a Process Costing System, Which Assumes That Normal Spoilage