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Cost Accounting For Dummies by Kenneth Boyd

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Chapter 17

What a Waste! Getting the Most from Spoilage, Scrap, and Reworked Products

In This Chapter

arrow Understanding the differences among spoilage, rework, and scrap

arrow Gauging the impact of spoilage

arrow Changing process costing totals due to spoilage

arrow Analyzing job costing for spoilage costs

arrow Reworking products and selling scrap

Spoilage is a term that describes units you produce that don’t meet your production standards. There may be defects (errors) in production, or in the case of food, at some point in time the product will no longer be wholesome. Either way, you won’t be able to sell substandard units to customers.

No production process is perfect. Every manufacturer ends production with stuff that’s left over and not used. Accountants refer to leftover material with a low sales value as scrap.

Sometimes, you can repair a defective product so it meets your production standards. At that point, you can sell it to a customer. Those units are considered reworked.

No production process “works” ...

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