## Treatment of Spoiled and Defective Work
The accounting treatment of rectification cost / loss on defective work depends on why the defect arose — whether it is normal (legitimate cost of the job) or abnormal (written off to the Costing Profit & Loss Account).
### 1. Defectives within an allowed/normal percentage (unavoidable)
- A normal rate of defectives is pre-established for the batch.
- If actual defectives are within (or close to) the normal limit → rectification cost is charged to the whole job and spread over the entire output of the batch.
- If actual defectives substantially exceed the normal limit → the excess rectification cost is written off as a loss in the Costing Profit & Loss Account.
### 2. Defect due to bad workmanship
- Rectification cost is treated as an abnormal cost (not a legitimate element of cost) → written off as a loss, unless it can be recovered as a penalty from the workman.
- Exception: if management had already provided for a proportion of defectives as unavoidable due to workmanship, that provided portion is treated as normal and charged to the batch.
### 3. Defect due to the Inspection Department wrongly accepting poor-quality incoming material
- The rectification cost is charged to the Inspection Department, not to the cost of manufacture of the batch.
- It is an abnormal cost → written off to the Costing Profit & Loss Account.
### Quick rule
> Normal loss → charge to job/batch (product cost). Abnormal loss → write off to Costing P&L A/c (or recover as a penalty / charge to the responsible department).