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  Cost of Defective Work

Introduction to Cost of defective work

In which defective work is acquired in connection with a particular job, the cost of defective work should be charged straight to that job. If not, the cost of normal defective work be •treated as a works overhead expense. Loss because of abnormal defective work should be transferred to costing profit and loss account. If in an operation the number of defectives is normal the cost of their rectification have to be charged to the complete operation and spread over the complete result of the batch. In case the number of defective articles goes beyond the normal limit, the cost of correct the excess number should be charged to costing profit and loss account. Defective work because of bad workmanship or faulty material is also an abnormal loss. In the former case it is able to recover as a penalty from the workmen who have been accountable for it when in the latter case the loss is charged to the Inspection Department and is not referred as a cost of manufacture.

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