How much spoilage should be charged off against revenues

Reference no: EM131763121

Question: Suppose a company manufactured 100,000 units in the month of August, exclusive of spoilage allocation. Of these completed units, 50,000 units were sold during the same month. The inspection point is at the end of the production process. For the month, normal spoilage is $40,000 and abnormal spoilage is $30,000. How much spoilage should be "charged off" against revenues?

Suppose a company has been buying widgets in bulk, 1000 units 3 times a year. The company pays $200 per unit on its PO and the relevant carrying cost is $20 per unit. Assume the units are required evenly throughout the year. What is the EOQ?

Reference no: EM131763121

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