Normal and abnormal spoilage in units. The following data, in physical units, describe a grinding process forJanuary:

Work in process, beginning 22,800 Started during current period 180,000 To account for 2 02,800 Spoiled units 14,400 Good units completed and transferred out 158,400 Work in process, ending 30,000 Accounted for 202,800 Inspection occurs at the 100% completion stage. Normal spoilage is 5% of the good units passing inspection.

Required 1. Compute the normal and abnormal spoilage in units.

2. Assume that the equivalent unit cost of a spoiled unit is $12. Compute the amount of potential savings if all spoilage were eliminated, assuming that all other costs would be unaffected. Comment on your answer.