What is the meaning of Abnormal spoilage?

Abnormal deterioration of the cash flow of a company is the decrease in the cash flow not following the normal operating cycle such as for example the settlement of a supplier of raw materials but to a mismanagement of the treasury such as for example the sale insolvent customers

 

 

Abnormal spoilage is loss of raw material that occurs in addition to normal loss during the production process of an entity that may cause due to broken machinery or inefficient operations and is considered to be partially preventive. It is recorded as expense in books of accounts of an entity and do not form part of production cost of product as in the case of normal losses during production process of an entity

Abdnormal Spoilage is the amount of waste destruction of inventory in normal business.

It is the amount of scrap generated by a production process that exceeds the normal expected level. -The cost of this excess spoilage is charged to to expense as incurred.including incorrect operator training,incorrect machine settings

loss caused by abnormal reason - like . un qualified worker  , old machines 

Spoilage which is not expected to arise under efficient operating conditions called "Abnormal Spoilage". It is not routine spoilage in the manufacturing process. It happens due to some accidents, carelessness or sudden machine breakdown.

Firstly, the spoilage by its self refers to the units of production that are not completed due to some ineffecient production process either as a result of ineffcient workers or bad quality materials or anything else... The spoilage is devided into normal and abnormal, The normal spoilage: is an immaterial amount of loss that due to the incompleting small quantity of units production and is out of the control of the corporation management because it should be happened at a point of time and it is a part of the cost of production. The abnormal spoilage: Is amtarial amount of loss that due to incompleting a big quantity of units of production,it is under the control of the management because it is can be lowered to be a normal spoilage through providing the required training for the workers, using high quality materials ...etc and it should be isolated from the cost of manufacturing by creating a loss account in the income statement in order to reflect the material loss (abnormal spoilage) as a seperate line. Why we are going to seperate the abnormal spoilage on the income statement ? 1- Because it is a material amount. 2-To reflect the effeciency and the effectiveness of the corporations management in managing the production processes (because it is under the control of them).

the excess of normal spoilage ,and treat as loss in income statement 

 

Abnormal spoilage is the amount (in monetary transaction) of waste of inventory/stock beyond what is expected in normal business processes. It can be the result of broken machinery or from inefficient operations, and is considered to be at least partially preventable.

Abnormal deterioration in company profits and loosing reputation/brand image  in market

Every company sets a certain level of spoilage which can be considered as normal. That is, that level of spoilage is inevitable in every production. Spoilage beyond what is expected is considered abnormal. Something wrong might had happened during the production. It could be machine malfunction or human inaccuracy and inefficiency.