Final answer:
Unexpected spoilage not part of normal operations is charged to overhead costs. These costs are not directly tied to specific products and encompass general factory operations including losses from spoilage.
Step-by-step explanation:
An unexpected spoilage that occurs during the manufacturing process and is not a normal part of operations is usually considered to be an overhead cost. Costs that are classified as overhead are not directly associated with the production of specific goods or services, but rather with general factory operations. These may include costs such as factory rent, utilities, and, in this case, losses from unexpected damage or spoilage. Unlike direct materials and direct labor which can be traced directly back to the production of goods, unexpected spoilage is a loss that affects the overall production environment, thus it is included in overhead costs.
It is important to note that the increase in the cost of production caused by factors such as factory damage will typically lead to a shift in the supply curve to the left. This represents a decrease in the quantity supplied at every price point. Variable costs, such as labor and raw materials, vary directly with output but such spoilages are not typically variable costs unless they can be directly tied to the production of more outputs.