When Spoiled Goods Have a Disposal Value, the Net Cost

question 10

Multiple Choice

When spoiled goods have a disposal value, the net cost of the spoilage is computed by ________.

• A) deducting disposal value from the costs of the spoiled goods accumulated to the inspection point
• B) adding the costs to complete a saleable product to the costs accumulated to the inspection point
• C) deducting the costs to complete a saleable product from the costs accumulated to the inspection point
• D) adding disposal value to the costs of the good units transferred

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Definitions:

Overhead Cost Driver

A factor that influences or contributes to the overhead costs of a business.

Employee Time Ticket

A document that records the amount of time an employee spends on various tasks, used for payroll and accounting purposes.

Cost Driver

A factor that influences or contributes to the expense of certain business operations.

Direct Costs

Costs that can be directly attributed to the production of a specific good or service, such as raw materials and direct labor.