When Abnormal Rework Is Distinguished from Normal Rework, and Charged

question 82

Multiple Choice

When abnormal rework is distinguished from normal rework, and charged to a separate loss account, which of the following is a likely result?

• A) Prices will have to increase on the company's products accordingly.
• B) If responsibility for normal spoilage expense is penalized less heavily than the unfavourable efficiency variances arising from rework, then managers will tend to rework too many spoiled units.
• C) If responsibility for abnormal spoilage expense is penalized less heavily than the unfavourable efficiency variances arising from rework, then managers will tend to rework too many spoiled units.
• D) If responsibility for normal spoilage expense is penalized more heavily than the unfavourable efficiency variances arising from rework, then managers will tend to rework too many spoiled units.
• E) If responsibility for abnormal spoilage expense is penalized more heavily than the unfavourable efficiency variances arising from rework, then managers will tend to rework too many spoiled units.

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