Computing spoiled unit costs A company manufactures a solution used in tanning leather products. The solution requires four manufacturing processes accomplished in four separate process centers. At the end of production in the third process center, the solution is tested for strength and stability. Solution that does not satisfy quality control measures is discarded.

During one month 500 units of solution failed to pass the quality control inspection. The cost of units transferred into the process center was $4.60 per unit. Additional cost incurred in the process center during the month was $1.20 per unit.

REQUIRED Compute the total cost of normal spoilage assuming: a. All spoilage is normal in this process center. b. Normal spoilage in the process center does not exceed 200 per month. c. All spoilage is normal and can be sold for $2.50 per unit. d. Normal spoilage for the month does not exceed 200 units and all spoiled units can be sold for $2.50 each.