Normal spoilage rates should be computed using the total good units completed as the base. Abnormal spoilage is spoilage that is not expected to arise under efficient operating conditions. Abnormal spoilage is regarded as avoidable and controllable. Abnormal spoilage costs are written off as losses. All spoilage occurs at the inspection point.
Normal spoilage is a percent of good units passing the inspection point.
Normal spoilage is allocated to ending WIP only if ending WIP has passed the inspection point. Summarise the flow of physical units of output. Compute output in terms of equivalent units. Compute equivalent unit costs. Any disposal value of salvage to be subtracted from job cost.