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Process Losses
Most manufacturing processes result in several portion of the raw materials utilized not being transformed into a reliable half losses. These losses may take the form of scrap, and rework, waste, and spoilt units.
A. Normal Loss: such is loss unavoidable and expected even beneath the most efficient systems of production. Normal spoilage cost is normally involved in product cost.
B. Abnormal Spoilage: This is loss which is avoidable along with efficient operating conditions. The cost is regarded as controllable and can be eradicated if due supervision and diligence are exercised. The cost is generally treated as a loss and charged to loss and profit account.
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