Abnormal Spoilage

What is Abnormal Spoilage?

Definition: Spoilage is the cost accounting concept of waste that is produced during a job. Spoilage is a normal occurrence in all manufacturing. Think of it like scrap. There will always be scrap metal or materials left over after a product is manufactured. In other words, spoilage is not only normal; it is unavoidable.

Abnormal spoilage is the amount of waste or destruction of inventory beyond what is expected in normal business processes. Abnormal spoilage can be the result of broken machinery or from inefficient operations, and is considered to be at least partially preventable. In accounting, abnormal spoilage, an expense item, is recorded separately from normal spoilage on internal books.

Abnormal spoilage is that amount of scrap generated by a production process that exceeds the normal, expected level. The cost of this excess spoilage is charged to expense as incurred. Abnormal spoilage has many causes, including incorrect operator training, incorrect machine settings, and sub-standard materials quality.

What Does Abnormal Spoilage Mean?

Abnormal spoilage, on the other hand, refers to waste that could have been avoided. When manufacturing processes go wrong or materials have defects, an abnormal about of waste or spoilage is produced. The abnormal spoilage could have been avoided if the job or process went according to plan.


Let’s take a look at an example. For instance, assume an ice cream company is in the middle of mixing up a 10,000,000,000-gallon vat of ice cream and the mixer breaks down. All of the ice cream in process will be ruined or wasted. This spoilage could have been avoided if the machine didn’t break down. Another example of abnormal spoilage is errors. If the chemist mixed in too many cookie dough chunks into the ice cream mix, the batch could also be ruined.

The concept of abnormal spoilage reinforces the idea that management should maintain equipment and train/supervise personnel. The first example could have been avoided if the ice cream machines were maintained properly. The second example could have been avoided if proper supervision was given to the people mixing in the cookie dough. Often times what management saves in avoiding maintenance and training expenses, they lose in abnormal spoilage.

Normal and Abnormal Spoilage

Within any production process, it is difficult to completely avoid waste or scrap. The standard amount of waste or scrap that occurs throughout the production process is known as normal spoilage. Normal spoilage should correspond to the amount of goods produced – the more goods, the more normal spoilage.

Any waste or spoilage that is not an expected part of the production process is known as abnormal spoilage. Abnormal spoilage does not directly correspond to the number of units produced, and is considered an unexcepted surplus.

For example, a restaurant sells vegetable soup. The vegetable peel cannot be used in the soup or in any other items from the menu, so is thrown away and considered normal spoilage. However, some of the vegetables go off before being used in hte soup. This is not a normal part of the production process, so is considered abnormal spoilage.

Spoilage in Accounting

Spoilage is calculated as part of process costing. Companies usually calculate expected spoilage rates for different products, assigning the amount of spoilage they expect to the cost of goods sold. If less normal spoilage is incurred than excepted, this is recorded as an unexpected gain.

Abnormal spoilage is not included in the product cost as the cost cannot be attributed to a specific sale. Instead, abnormal spoilage is considered a separate, unrecoverable expense which should be recorded as a loss in a “loss for abnormal spoilage” account.

Why should spoilage be given attention?

Spoilage, especially normal spoilage, is always part of the production process as it is unavoidable and expected. However, it is important to take notice of them and do something about them before they turn for the worse and become abnormal spoilage. Here are some reasons why:

They can signal a need to evaluate the production process. A part of the production process can be responsible for the spoilage. For example, a conveyor belt in a cookie manufacturing plant that is too loose and makes erratic movements can cause the cookies to break.
Spoilage can indicate a mistake that is continuously and unknowingly done by an operator. When evaluated, the operators may be required to undergo re-training or training in a new process.