Accelerating out of the Slow Growth Economy: Invest in oneself
Why One Should Invest in Oneself A recurrent theme among the leaders and the potential leaders is about how to succeed in a low and slow growth economy. With job opportunities diminishing and pay hikes being lesser, there is a need for leaders and aspiring leaders to upgrade their skills and be valuable to their […]
The Indian Real Estate Market
In the previous couple of articles we have discussed about the real estate markets in the United States as well as Japan. These markets were of developed countries and their economies are largely self sufficient. However, India is a developing economy with a very different case. It has seen rapid growth in the 1990’s and […]
Consultative Selling: Pre-Sales Preparation
Selling is an Art. Not everyone can shine well as a Salesman. But for those who do train and groom themselves as salesmen, the career can be a rewarding as well as challenging experience. Selling in current times is definitely a challenge, especially when the competition is very high and the customers are very choosy, […]
How to Combat Stress, Burnout, Loneliness, and Low Productivity at the Workplace
The Problems of Demanding Workplaces Contemporary workplaces are very demanding in terms of the physical and mental toll they extract from the employees. With ever-increasing competition among businesses and scarce resources, organizations demand more from the employees who perceive it as asking too much for too less. Also, longer working hours, the need to be […]
Designing and Implementing an Effective Work from Home Policy
Need for Effective Work from Home Policies With work from home and remote working becoming quite popular and the norm in many organizations, it is imperative that Human Resource (HR) Managers think about ways and means to design and implement effective work from home policies. Indeed, with remote work being reported by nearly half of […]
Rework is that part of the final produce which has not been accepted by the client because it does not meet the required specifications. However, those specifications can be met by working on the item once again. Hence the name rework.
Spoilage is also that part of the final produce that does not adhere to the specifications given by the client and is therefore not accepted by them.
The difference between rework and spoilage is that, rework will be reworked on and sold at full price whereas spoilage is considered to be defective goods and is discarded at throw away prices in the market.
Rework and spoilage are closely linked concepts. If firms have a high percentage of rework, they will also have a lot of items in their spoilage.
Rework and spoilage are additional cost for the company. Since the company is in the business to make a profit, this gets passed on to the customer in the form of additional costs. This makes the company uncompetitive in comparison to its competitors.
The company with the lowest amount of rework and spoilage costs will have the least loss and hence they will be able to provide the best deal to the customer. Reducing rework and spoilage is therefore strategic in nature and must be paid careful attention to.
Job costing has created a system wherein rework and spoilage costs are allocated to the respective job where the loss is supposed to have occurred. This helps the company find out the types of jobs it is efficient and not efficient in and therefore work on reducing costs:
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