Spoilage

Spoilage is generally defined as waste. Accounting treatment for spoilage depends on the character of the spoilage. Normal spoilage is waste that cannot be avoided; it occurs under normal efficient operations. Normal spoilage is a product cost. Equivalent units of production include spoiled units (normal spoilage). Abnormal spoilage is waste that is not expected to occur during normal operations. Abnormal spoilage is a period cost as a separate component of cost of goods sold.