1)Debit Normal loss from Spoilage /waste/defective
Credit Process /Job /contract
(normal loss charged directly to production cost )
2)If charged indirectly to production cost
Debit Production overhead account
Credit stores ledger
which one is correct?
manufactuing cost of work order is Rs 1000,8% of the production against that the order spoiled and rejection is estimated to have a realisable value of Rs 20 only .The normal rate of spoilage is 2% ..Record this entry in cost books
Normal spoilage @ 2% is part of production cost.
Rest 6% abnormal loss is debited to P&L (net of realizable value)
CAclubindia
