Question:
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 5% of the good units passing inspection.
1. Compute the normal and abnormal spoilage in units.
2. Assume that the equivalent-unit cost of a spoiled unitis$10. Compute the amount of potential savings if all spoilage were eliminated, assuming that all other costs would be unaffected. Comment on youranswer.