Special Issues relating to the raw materials

Accounting described in this section the cost of materials, if the production in the remaining ingredients (scrap materials), product defects (defective goods), and defective products (spoiled goods).

A. Residual materials (Scrap Material) 
In the production process, not all materials can be a part of the finished product. Materials that were damaged in the course of the work called the rest of the ingredients.
If in the process of production experience of a remaining material production process, a problem that arises is how to manage the sale of the remaining ingredients. Proceeds from sale of the remaining material can be treated as:

1. Subtracting the cost of raw materials used in order to generate the remaining ingredients.
2. Deduction of the actual factory overhead costs occur
3. Outside of business income (other income)

Recording the rest of the ingredients: If the number and relative high value of the remaining ingredients, then takes control of inventory remaining ingredients. The stock card holder in Accounting to record the transfer of the remaining inventory of existing materials in the warehouse. 

B. Defective products (Spoiled Goods) 
Defective product is a product that does not meet the quality standards that have been established, which can not be economically repaired a good product. Defective product is different from the rest of the ingredients for the rest of the material is a material that was damaged in the production process, so have not had a product, while the defective product is a product that has absorbed the cost of materials, labor costs and factory overhead costs.


C. Product Defects (defective Goods) 
Defective product is a product that does not meet the quality standards that have been determined, but with the cost of rework to fix it, the product can be refined economically to a better product.
Problems that arise in a product defect is how to treat the additional cost for rework (rework cost) product defects. Treatment of the rework of defective products are similar to those discussed in the product is damaged (spoiled goods).

If a product defect is not an unusual thing happened in the production process, but because of certain characteristics of the work order, then the cost of rework of defective products can be charged as additional cost of production orders is concerned.

If the product is a common defect occurs in the process of the product, then the cost of rework can be imposed on the entire production by taking into account the cost of rework in the manufacturing overhead rates. Rework costs of defective products that actually happens in Put it in the actual manufacturing overhead account.