Distinguish between Waste and Scrap. Discuss the treatment of normal and abnormal scrap in Cost Accounts.

Difference between Waste and Scrap Waste Scrap 1. The portion of raw material which is lost during storage/ production and discarded. 1. The output which is discarded and disposed off without further treatment. 2. It is connected with raw material or inputs to the production process. 2. It is the loss connected with the output. 3. Waste of materials may be visible or invisible. 3. Scraps are generally identifiable and has physical substance. 4. Generally, waste has no recoverable value. 4. Scraps are termed as by-products and has small recoverable value. Treatment of Scrap Normal- The cost of scrap is borne by good units and income arises on account of realisable value is deducted from the cost. Abnormal- The scrap account should be charged with full cost. The credit is given to the job or process concerned. The profit or loss in the scrap account, on realisation, will be transferred to the Costing Profit and Loss Account.