Eldervale Winery produces premium wine in the Hunter Valley. Jasmine Droll, the vineyard manager who is responsible for overseeing the grape harvest, ignores company guidelines and decides to hire some inexperienced harvest workers. As a result a lot of good grapes are wasted. For the purpose of product costing, the losses associated with this grape wastage should be treated as

Question

Quizplus · Accepted Answer

The grape wastage in this scenario is abnormal spoilage because it is caused by the actions of the vineyard manager, not by normal expected losses in the grape harvesting process. Abnormal spoilage should be treated as a separate cost item in product costing, as it is not a regular occurrence and can impact the accuracy of cost calculations. Options A, C, and D are not appropriate because they do not accurately reflect the nature of the spoilage in this scenario.

Eldervale Winery Produces Premium Wine in the Hunter Valley