Abnormal spoilage is that amount of scrap generated by a production process that exceeds the normal, expected level. The cost of this excess spoilage is charged to expense as incurred. Abnormal spoilage has many causes, including incorrect operator training, incorrect machine settings, and sub-standard materials quality.
For example, a production process has an expected spoilage rate of 5%. A production run valued at $1,000,000 is initiated, for which the standard scrap cost is expected to be $50,000. The actual scrap amount turns out to be $58,000, so the abnormal scrap associated with the production run is $8,000.