# analysis5.1 - AC2720 Module 5 Costing Methods Analysis 5.1...

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AC2720: Module 5 Costing Methods Analysis 5.1 Spoilage, Rework, and Scrap 1 There are four problems in this assessment. You need to complete all the four problems. Problem 1: Normal and Abnormal Spoilage in Units The following data, in physical units, describe a grinding process for January: Inspection occurs at the 100% completion stage. Normal spoilage is 4% of the good units passing inspection. Answer the following questions: 1. Compute the normal and abnormal spoilage in units. 2. Assume that the equivalent-unit cost of a spoiled unit is \$11. Compute the amount of potential savings if all spoilage were eliminated, assuming that all other costs would be unaffected. Comment on your answer. Problem 2: Reworked Units, Costs of Rework Heyer Appliances assembles dishwashers at its plant in Tuscaloosa, Alabama. In February 2014, 60 circulation motors that cost \$110 each (from a new supplier who subsequently went bankrupt) were defective and had to be disposed of at zero net disposal value. Heyer Appliances was able to rework all 60 dishwashers by substituting new circulation motors purchased from one of its existing suppliers. Each replacement motor cost \$125.

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