Bubbles Cart Shop is a manufacturer of motorized carts for vacation resorts. Mr. Lahey, the plant manager of Bubbles Cart Shop, obtains the following information for Job #10 in August 2014. A total of 26 units were started, and 6 spoiled units were detected and rejected at final inspection, yielding 20 good units. The spoiled units were considered to be normal spoilage. Costs assigned prior to the inspection point are $1,050 per unit. The current disposal price of the spoiled units is $200 per unit. When the spoilage is detected, the spoiled goods are inventoried at $200 per unit.

Requirements

1. What is the normal spoilage rate?

2. Prepare the journal entries to record the normal spoilage, assuming the following:

a. The spoilage is related to a specific job.

b. The spoilage is common to all jobs.

c. The spoilage is considered to be abnormal spoilage.

*show work/formula please