Question

Differentiate between spoilage, rework, and scrap, giving examples of each from a well-known company.

Answer 1

Spoilage: It is the term used for materials which are badly damaged in manfacturing operations hence taken out of process to be disposed in some manner without further processing.Spoilge is basically of two types Normal spoilage and anormal Spoilage. Example: normal Spoilage calculated by spoiled units divided by totalunits produced

Rework: It means product which is not valuable and have no quality product rework includes repairs, reconditioning

Scrap: Material which is disposed off without further treatment . Generally Scrap has no value. sometime it may re introduce into the process as a raw material.

Example: Reliance Ltd Purchase a machinery value 100000$ and its useful life life is 8 years at depreciable rate 12% . using straightline method.

100000*12%=12000$

12000*8=96000

Scrap value 100000-96000=4000$