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Bearit Figurines manufactures glass figurines at its Michigan facility. The nature of its process is such that management expects normal spoilage at a rate of
Bearit Figurines manufactures glass figurines at its Michigan facility. The nature of its process is such that management expects normal spoilage at a rate of 2% of good parts. In manufacturing, any spoiled units are not assigned a disposal value.
Questions: 1. What are the managerial issues involved in selecting or reviewing the percentage of spoilage as normal or abnormal?
2. What factors could change should spoilage for Bearit change from normal to abnormal in the future? Please explain your rationale.
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