Question
Asked Dec 17, 2019
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“Total input includes abnormal as well as normal spoilage and is, therefore, inappropriate as a basis for computing normal spoilage.”Do you agree? Explain.

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Expert Answer

Step 1

Inventory shrinkage:

 

It represents the loss of inventory. In other words, it refers to the difference between the amount of inventory shown in the accounting records and the actual inventory. The difference indicates the issues with the inventory caused due to lost, theft, clerical errors, damaged goods or spoilage.

Step 2

Discuss whether the given statement is agreeable or not.

 

  • The normal spoilage rate is found out through normal input but not from the total input.

 

  • The percen...

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