ECONOMICS

Detailed explanation-1: -Abnormal spoilage refers to expenses related to excess waste or unusable goods that exceed the normal levels of expected spoilage, which cost businesses money. Normal levels are often computed off of historical experience and normal spoilage is an expected and ordinary expense.

Detailed explanation-2: -Normal spoilage is the standard amount of waste or scrap that is caused by production, and which is difficult to avoid. Abnormal spoilage exceeds the normal or expected rate of spoilage. For example, an overcooked meal cannot be served to a customer, and so is instead classified as abnormal spoilage.

Detailed explanation-3: -The cost of abnormal spoilage includes the cost of raw materials, labor costs associated with replacing or repairing damaged goods, and any lost profits due to an inability to sell or use the affected goods.

Detailed explanation-4: -When considering normal and abnormal spoilage, which one of the following is theoretically the best accounting method for spoilage in a process-costing system? Normal spoilage cost should be charged to good units and abnormal spoilage cost should be charged to a separate expense account.