Q31.Discuss meaning, accounting treatment and control of spoilage.
Meaning of Spoilage: It is term used for material which is badly damaged in manufacturing operation, and it cannot be rectified economically and hence taken out of process to be processed of in some manner without further processing.
Accounting Treatment of Spoilage: Normal spoilage are charged to good production. Any realized by selling of such spoilage is credited production account.
Control of Spoilage:
1. Standard allowance should be predetermined.
2. Systematic reporting to top management.