ADM 3346 Lecture Notes - Lecture 6: Income Statement

• School: University of Ottawa
• Department: Administration
• Course: ADM 3346
• Professor: Tiemei L I

Document Summary

Unacceptable units of production that are subsequently repaired and sold as finished goods of the same or lower quality. Residual material that results from manufacturing a product. Has little sales value, often zero, compared with the total sales value of the product. Spoilage: output that fails to attain either a specified performance level or standard of composition. The stage of the production process at which products are examined to determine whether they are acceptable or spoiled. Spoilage is typically assumed to occur at the stage of completion where inspection takes place. Process costing and spoilage: normal spoilage arises under efficient operating conditions. As a result of predictable rates of failure in a production process. Costs are part of the cost of goods manufactured: abnormal spoilage is not expected to arise under efficient operating conditions. Written off as losses in period of occurrence.