If a company set a standard of zero rework ________.
A) all rework is treated as abnormal and is written off as a cost of the current period
B) all rework is treated as normal and is written off as a cost of the current period
C) all rework is treated as abnormal and is shown as a liability of the current period
D) all rework is treated as normal and is shown as a liability of the current period

Question

Quizplus · Accepted Answer

If a company sets a standard of zero rework, any rework that occurs would be considered abnormal and would need to be written off as a cost of the current period. This is because rework indicates a failure to meet the standard, and therefore cannot be considered a normal part of the production process. Option B is incorrect because treating rework as normal would imply that it is expected, which is not the case if the company has set a standard of zero rework. Option C is incorrect because treating rework as a liability would not be appropriate, as it is a cost of production rather than an obligation or debt. Option D is also incorrect for the same reason as option B.

If a Company Set a Standard of Zero Rework ________