The correct answer is: A. normal spoilage rates.
Normal spoilage is the amount of spoilage that is expected to occur in the normal course of production. It is caused by factors such as the nature of the materials being used, the manufacturing process, and the environment in which the production takes place. Normal spoilage is not considered to be a defect, and it is not included in the cost of goods sold.
Abnormal spoilage is the amount of spoilage that is caused by factors that are not considered to be normal in the production process. It is caused by factors such as accidents, negligence, or poor quality control. Abnormal spoilage is considered to be a defect, and it is included in the cost of goods sold.
Normal scrap is the amount of material that is lost during the manufacturing process. It is caused by factors such as the nature of the materials being used, the manufacturing process, and the environment in which the production takes place. Normal scrap is not considered to be a defect, and it is not included in the cost of goods sold.
Abnormal scrap is the amount of material that is lost during the manufacturing process that is caused by factors that are not considered to be normal in the production process. It is caused by factors such as accidents, negligence, or poor quality control. Abnormal scrap is considered to be a defect, and it is included in the cost of goods sold.
To calculate normal spoilage rates, units of normal spoilage are divided to total completed units, rather than total actual produced units. This is because normal spoilage is expected to occur in the normal course of production, and it is not included in the cost of goods sold.