Final answer:
Normal spoilage costs are added to the cost of good units, which spreads the spoilage cost across the entire production run to reflect accurately in the production costs per unit.
Step-by-step explanation:
If a spoilage is normal (expected), the cost of spoiled units is added to the cost of the good units. This means the expense of the spoiled units is incorporated into the overall cost of production and then spread over the cost of the units that are completed successfully.
It's not subtracted directly from specific line items like direct material or labor costs, nor is it subtracted from the cost of goods sold (COGS). This accounting treatment ensures that normal spoilage costs are absorbed by the entire production run, ensuring a more accurate reflection of production costs per unit.
It is important to differentiate between normal and abnormal spoilage, as abnormal spoilage would be accounted for differently, generally as a separate expense.
Therefore, the correct answer is d.to the cost of the good units.