spoilage in cost accounting
Spoilage refers to units of production whether fully or partially completed that do not meet the specifications required by customers for good units and are discorded or sold that reduced prices.
Examples of spoilage are defective shirts, jeans, and carpeting sold as seconds.
There are two types of scrap:
1. Normal spoilage:
Normal spoilage is spoilage inherent in a particular production process. in particular it arises even when the process is carried out in an efficient manner. The cost of normal spoilage are typically included as a component of the costs of goods units manufactured because good units can not be made without also making some defective units.
For this reason normal spoilage costs are inventoried that is they are included in the cost of the good units completed.
Abnormal spoilage :
abnormal spoilage is spoilage that is not inherent in a particular production process and would not arise under efficient operating conditions.
abnormal spoilage is usually regarded avoidable and controllable. Line operations and other plant personnel generally can decrease or eliminate abnormal spoilage by identifying the reasons.
Examples of spoilage are defective shirts, jeans, and carpeting sold as seconds.
There are two types of scrap:
1. Normal spoilage:
Normal spoilage is spoilage inherent in a particular production process. in particular it arises even when the process is carried out in an efficient manner. The cost of normal spoilage are typically included as a component of the costs of goods units manufactured because good units can not be made without also making some defective units.
For this reason normal spoilage costs are inventoried that is they are included in the cost of the good units completed.
Abnormal spoilage :
abnormal spoilage is spoilage that is not inherent in a particular production process and would not arise under efficient operating conditions.
abnormal spoilage is usually regarded avoidable and controllable. Line operations and other plant personnel generally can decrease or eliminate abnormal spoilage by identifying the reasons.
