Accounting for normal spoilage Mancos Manufacturing Company makes products in a process costing environment. The company makes telephone answering machines. During Sep- tember the company completed 20,000 units which required the manufacturing costs shown on the following page.

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Total Cost Direct materials Direct labor Manufacturing overhead Total cost of completed products $106,700 162,960 130,340 $400,000 The completed units are tested and inspected for various operating flaws. Units that do not pass inspection are discarded because the cost of reworking them is too high and there is no market value for the faulty units. During September, 800 of the completed units did not pass inspection. All faulty units are considered normal lost units.