Arokia Electronics manufactures cell phone models in its Saskatoon plant. Suppose the company provides you with the following information regarding operations for September 2015:
Total cell phones manufactured ............................. 10,000
Phones rejected as spoiled units ............................. 500
Total manufacturing cost .................................... $209,000
Assume the spoiled units have no disposal value.
Required
1. What is the unit cost of making the 10,000 cell phones?
2. What is the total cost of the 500 spoiled units?
3. If the spoilage is considered normal, what is the increase in the unit cost of good phones manufactured as a result of the spoilage?