At the end of 20x2, BRV Corporation's accounting information system contained the following balances:
Job 101 $300
Job 102 500
Job 103 600
Job 104 100
Spoilage costs, which are not included in the preceding data, were as follows:
I. Job 103 had to be stored under very specific temperature and humidity conditions. An electrical failure in the warehouse created a deviation from those conditions. The resulting spoilage cost for Job 103 was $40.
II. Additional spoilage costs from the electrical failure totalled $70.
III. While Job 102 was in process, handling errors with material created spoilage costs of $60. These types of handling errors occur occasionally as part of regular operations.
IV. A key production machine, normally used extensively for all jobs, broke down unexpectedly while Job 104 was in process, in spite of regular preventive maintenance. Associated spoilage costs were $30.
a)Classify each spoilage cost as normal or abnormal. Explain your reasoning.
b)Using your classifications in part (a), determine revised total costs for each of the 4 jobs. Also identify any other cost accounts that would be affected.

Question

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The Answer of At the end of 20x2, BRV Corporation's accounting information system contained the following balances:
Job 101 $300
Job 102 500
Job 103 600
Job 104 100
Spoilage costs, which are not included in the preceding data, were as follows:
I. Job 103 had to be stored under very specific temperature and humidity conditions. An electrical failure in the warehouse created a deviation from those conditions. The resulting spoilage cost for Job 103 was $40.
II. Additional spoilage costs from the electrical failure totalled $70.
III. While Job 102 was in process, handling errors with material created spoilage costs of $60. These types of handling errors occur occasionally as part of regular operations.
IV. A key production machine, normally used extensively for all jobs, broke down unexpectedly while Job 104 was in process, in spite of regular preventive maintenance. Associated spoilage costs were $30.
a)Classify each spoilage cost as normal or abnormal. Explain your reasoning.
b)Using your classifications in part (a), determine revised total costs for each of the 4 jobs. Also identify any other cost accounts that would be affected.

At the End of 20x2, BRV Corporation's Accounting Information System