Question

Difference between scrap and wastage in cost accounting

Answer 1

Waste: This is a loss connected with raw material or inputs to the production process and usually means to refer that input has been lost due to any reason either because of its nature of the material itself, nature of the process or some other conditions. Sometimes such output that does not have any sales or use is also referred as waste.
For example in paint industry many chemical are used that are volatile i.e. can evaporate at room temperature. Another example can be of break-oil which is wasted in the process named “bleeding” in which air bubbles are removed from the pressure pipes so that hydraulics can work effectively.

Scrap: This is a loss connected with the output. Most of the time at the end of production/conversion process such outputs are generated that were not intended but cannot be eliminated due the nature of material or process itself. Usually they are of no to insignificant value as compared to the main product that was intended. We usually know them with the term by-products. This is considered as loss as not all of the raw material is converted into intended product.
For example in furniture manufacturing chippings of wood and sawdust is a common example. Another very known example is of gold dust in jewellery and gold industry.

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