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The following data, in physical units, describe a grinding process for January:
Work in process, beginning 19,000
Started during current period 50,000
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.
(10 marks)
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 answerPlease do not simply type out a full question and expect to be provided with a full answer. You must have an answer in the same book in which you found the question, so ask about whatever it is you are not clear about and I will explain.
However, equivalent units have now been removed from the syllabus and so are not examinable. In addition, the question cannot be asked in this form in the Paper MA exam because you cannot be asked to comment on anything.
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