Question: Recognition of loss from spoilage. Arokia Electronics manufactures cell phone models in its Walnut Creek plant. Suppose the company provides you with the following information

Recognition of loss from spoilage. Arokia Electronics manufactures cell phone models in its Walnut Creek plant. Suppose the company provides you with the following information regarding operations for September 2009:

Total cell phones manufactured 10,000 Phones rejected as spoiled units Total manufacturing

Assume the spoiled units have no disposal value.

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?

4. If the spoilage is considered abnormal, prepare the journal entries for the spoilageincurred.

Total cell phones manufactured 10,000 Phones rejected as spoiled units Total manufacturing cost 500 $209,000

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