Abnormal Spoilage
Barron's Accounting Dictionary:
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Abnormal Spoilage
Spoilage that is recognized as a loss when discovered. normal spoilage is inherent in the manufacturing process and is unavoidable in the short run. Abnormal spoilage is spoilage beyond the normal spoilage rate. It is controllable because it is a result of inefficiency. It is not a cost of good production, but rather it is a loss for the period. Costs are assigned to the spoiled units and then credited to work - in - process inventory and debited to a loss account.
| Abc Method, Abatement, Abandonment | |
| Absorb, Absorption Costing, Abusive Tax Shelter |
Investopedia Financial Dictionary:
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Abnormal Spoilage
The waste or wrecking of inventory beyond what is expected in normal business processes. Abnormal spoilage can be the result of broken machinery or from inefficient operations, and is considered to be at least partially preventable. In accounting, abnormal spoilage is recorded as a separate item: loss from abnormal spoilage.
Investopedia Says:
Material spoilage is often discovered during the inspection and quality control process. In job costing, spoilage can be assigned to specific jobs or units, or can be assigned to all jobs associated with production as part of the overall overhead.
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We go over these methods of calculating this component of the balance sheet, and how the choice affects the bottom line. Inventory Valuation For Investors: FIFO And LIFO
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Barron's Accounting Dictionary
Dictionary of Accounting Terms. Copyright © 2010 by Barron's Educational Series, Inc. All rights reserved.
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