1C2C A COMPANY THAT USES A PROCESS COSTING SYSTEM INSPECTS ITS GOODS...

191. CSO: 1C2b LOS: 1C2c

A company that uses a process costing system inspects its goods at the 60% stage of

completion. If the firm’s ending work-in-process inventory is 80% complete, how would

the firm account for its normal and abnormal spoilage?

a. Both normal and abnormal spoilage costs would be added to the cost of the good

units completed during the period.

b. Both normal and abnormal spoilage costs would be written off as an expense of

the period.

c. Normal spoilage costs would be added to the cost of the good units completed

during the period; in contrast, abnormal spoilage costs would be written off as a

loss.

d. Normal spoilage costs would be allocated between the cost of good units

completed during the period and the ending work-in-process inventory. In

contrast, abnormal spoilage costs would be written off as a loss.

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