ACC* - Accounting ACC* M115 Lecture Notes - Lecture 15: Income Statement
6 Jun 2020
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Inspecting points and allocating costs of normal spoilage. Spoilage might occur at various stages of production process but it is typically detected only at one or more inspection points. The unit costs of normal and abnormal spoilage are the same when the two are detected at the same inspection point. Early inspections can help prevent any further costs being wasted on units are are already spoiled. Firms often conduct multiple inspections and also empower workers to identify and resolve defects on a timely basis. Job costing systems generally distinguish between normal spoilage attributable to a speci c job from normal spoilage common to all jobs. Job costing and accounting for normal spoilage attributable to a speci c job. When normal spoilage occurs because of the speci cations of a particular job, that job bears the cost of the spoilage minus the disposal value of the spoilage. Journal entry to recognize disposal value would be:
