1C2C DARDEN MANUFACTURING, A CALENDAR-YEAR CORPORATION, HAD $17,000 O...

186. CSO: 1C2a LOS: 1C2c

Darden Manufacturing, a calendar-year corporation, had $17,000 of spoilage during April

that production management characterized as abnormal. The spoilage was incurred on

Job No. 532, that was sold three months later for $459,000. Which of the following

correctly describes the impact of the spoilage on Darden’s unit manufacturing cost for

Job No. 532 and on the year’s operating income?

Unit Manufacturing Cost Operating Income

a. Increase. No effect.

b. Increase. Decrease.

c. No effect. Decrease.

d. No effect. Not enough information to judge.