Answer
Accounting for spoiled units involves cost assignment rather than cost incurrence because it reallocates existing production costs to account for the loss of spoiled units, without incurring additional costs.
Work Step by Step
Accounting for spoiled units is primarily concerned with cost assignment rather than cost incurrence. This is because the presence of spoiled units does not result in incurring additional costs beyond what has already been expended in the production process. The costs associated with producing these spoiled units have already been incurred as part of the normal production process.
Therefore, the accounting process for spoiled units involves allocating or assigning these preexisting production costs to the spoiled units. This assignment helps accurately reflect the financial impact of the spoilage in the accounting records, and it is not about incurring new costs but rather reallocating existing ones to properly account for the loss due to spoilage.
