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a. more frequently caused by factors that are inherent in the manufacturing process.b. given the same accounting treatment as normal spoilage.c. not included as part of the cost of goods produced.d. not typically influenced by the “tightness” of production standards.
c. not included as part of the cost of goods produced
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c. not included as part of the cost of goods produced
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Answer C is the right option . Not included as a part of COGM .
C is correct ,,,,,,,,,,,,,,,,,,,,,
Answer C is correct abnormal spoilage is not considered as part of cost as its not usual in normal course of business operations
agree with answers ..............................................
Abnormal spoliation or Abnormal Loss is that during continuously mass-produced through one or more processes.
This is when a loss occurs over and above the normal expected loss. This maybe due to reasons such as faulty machinery or errors by labourers.
More precisely look at the formula
Cost per unit = Cost of inputs / Expected output in units
If there is an abnormal loss occurs it will reduce the output units which were expected at the beginning of the process and ultimately increases the cost per unit of the finished Goods..
Those who are saying it’s not part of the COGS they must know that it is process costing it’s not ABC or Direct costing/margin costing
Abnormal Loss will be added to the units of loss during the process and when number of units in denominator which means less the units the more increases the cost per unit. So Ultimately
More appropriate to this Scenario is
Answer A
Like few factors are embedded in the process that caused Abnormal Loss
a. more frequently caused by factors that are inherent in the manufacturing process
Normal spoilage occurs even in the best of production environments. No matter how efficiently you work, you still incur normal spoilage. That’s because there are limitations to any production process.
Abnormal spoilage is spoilage beyond what you normally expect in production. Accountants also define the term as spoilage that wouldn’t happen if you operated efficiently. If you have spoilage you can avoid, you have abnormal spoilage.
b
abnormal spoilage is normally referred to as unexpected spoilage. Although these spoilages do not have a standard computation method, these are treated as usage and thus should be treated as normal spoilage. However, these abnormal spoilage could not be included in the standard costing as in most cases they do not have a definite computation or occurrence.
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