Q32. Discuss meaning, accounting treatment and control of defective.
Meaning of Defective: It signifies those units or portions of production which can be rectified and turned out as good unit by the application of additional material, labor or other service.
Treatment of Defective: Normal defective charged to particular job or product if defective identified with a particular product or job. If it is not identified with a particular job or product, it is charged to overhead. Abnormal defective net cost charged to profit and loss account.
Control of Defective:
1. A standard should be predetermined for comparison.
2. Proper report to top management.