Defective units
In one sentenceUnits of production with a defect that can be fixed by reworking them and then sold at the normal price or a lower one, unlike spoiled units that cannot be fixed.
Simply put
A defective unit is not thrown away: you rework it at an extra cost and then sell it. A spoiled unit, however, can only be sold as scrap.
If rework cost is normal in production it is charged to all production, and if it is abnormal it is treated as a loss for the period.
Worked example
A clothing factory found 100 pieces with defective stitching, and re-stitching one piece costs 8 SAR.
Number of defective pieces100 pieces
Rework cost per piece8 SAR
Rework cost100 × 8 = 800 SAR
Formula: Number of defective units × rework cost per unit
Don't confuse it with
Inventory spoilageSpoilage loses its value and cannot be fixed, while defective units are fixed and sold.