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A company uses a process cost system in accounting for its single product. The cost of units failing final inspection, termed normal spoilage, is added
A company uses a process cost system in accounting for its single product. The cost of units failing final inspection, termed normal spoilage, is added to the inventory cost of the good units produced. Units spoiled during production are termed abnormal spoilage, and their cost is immediately written off to cost of goods sold. During the previous month, the entire inventory of spoiled units (both normal and abnormal spoilage) was sold at a price lower than it had cost to produce them. How would this sale affect the reported net income of the company? A. Decrease net income from the sale of the abnormal spoilage and decrease net income from the sale of the normal spoilage. B. Increase net income from the sale of the abnormal spoilage and increase net income from the sale of the normal spoilage. C. Decrease net income from the sale of the abnormal spoilage and increase net income from the sale of the normal spoilage. D. Increase net income from the sale of the abnormal spoilage and decrease net income from the sale of the normal spoilage
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