The costs of normal spoilage are allocated to the units in ending work-in-process inventory, in addition to completed units if the units ________.
A) in ending inventory have not passed the inspection point
B) in ending work-in-process inventory have passed the inspection point
C) in ending work in process inventory are more than 25% complete
D) in ending work-in-process inventory are less than 25% complete

Question

Quizplus · Accepted Answer

Normal spoilage costs are allocated to the units in the ending work-in-process inventory as well as the completed units if the units in ending work-in-process inventory have passed the inspection point. This is because before the inspection point, the spoilage is considered abnormal and should not be included in the overall costs as it is not a regular part of the manufacturing process. Only the normal spoilage that occurs after the inspection point is included in the costs allocated to the ending work-in-process inventory and completed units.

The Costs of Normal Spoilage Are Allocated to the Units