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NORMAL SPOILAGE cannot be avoided.It results from the manufacturing process such as evaporation.
ABNORMAL SPOILAGE does not occur in effecient manufacturing enviornment.It results from power breakdown or any other aspect which does not occur in normal manufacturing conditions.
NORMAL SPOILAGE cannot be avoided.It results from the manufacturing process such as evaporation and treated as one of the manufacturing cost account.
ABNORMAL SPOILAGE does not occur in efficient manufacturing environment, need further investigation and in some cases should be disclosed in a separate account.
All spoiled units are classified as either normal or abnormal. Normal spoilage is the amount that is expected from the production process. For whatever process is being looked at, the company will have established standards about how many defective (spoiled) units there should be (or are expected to occur). This expected amount of spoilage is usually presented in a question in one of three ways: 1) A percentage of the number of units started into production 2) A percentage of the units that complete production 3) A percentage of the good units that passed inspection This is helpful for us as it gives in the question the way to calculate the number of spoiled units. The number of spoiled units up to and including, but not exceeding, this expected number are classified as Normal Spoilage. Any spoiled units in excess of the expected spoilage are classified as Abnormal Spoilage. This distinction is important because the treatment of the costs associated with normal and abnormal spoilage is different
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