Tuesday, June 7, 2011

Difference between normal and abnormal spoilage?

Accountants often face difficulty situations when dealing with spoilage and job order costing systems. 

Generally, normal spoilage is part of a particular production process used by the company and arises when the process is operated in an efficient manner. There is nothing that the company can really do to prevent normal spoilage and this must add this to the cost of product.

In contrast, abnormal spoilage is not considered a normal part of  a particular production process employed by a company and does not arise under the normal efficient operations of the manufacturing process. A company should try to avoid abnormal spoilage at all costs in order to have the most efficient production system possible and to compete on the market with competitors.


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