Dictionary of Accounting Terms: spoilage
spoilage
production that does not result in good finished products. The amount of spoilage can be considered either normal or abnormal. Spoilage can be classified into the following categories: (1) Spoiled goods-goods that do not meet production standards and are either sold for their salvage value or discarded; (2) Defective units-goods that do not meet standards and are sold at a reduced price or reworked and sold at the regular or a reduced price; (3) Waste-material that is lost in the manufacturing process by shrinkage, evaporation, etc.; and (4) Scrap- by-product of the manufacturing process that has a minor market value.
