When Accounting for the Costs of Abnormal Spoilage at the End

question 28

Multiple Choice

When accounting for the costs of abnormal spoilage at the end of the period, the costs of abnormal spoilage are

• A) included as part of the cost of unit completed.
• B) expensed as loss on abnormal spoilage in the current period.
• C) included in the cost of finished goods.
• D) expensed as closing work in process in the current period.

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Definitions:

Efficiency Loss

The reduction in economic efficiency that occurs typically due to market distortions such as taxes, subsidies, tariffs, or monopolies, leading to an allocation that is not welfare-optimal.

Excise Tax

A tax on the manufacturing, sale, or consumption of a particular good or service within a country.

Supply Curve

A graphical representation showing the relationship between the price of a good or service and the quantity of that good or service that suppliers are willing and able to provide at each price level.

Before-tax

A financial figure or situation measured without considering the effects of taxation.