Rework
Rework is the process of correcting defective units so they meet quality standards rather than scrapping them. The additional cost incurred is an internal failure cost; normal rework is absorbed by good output, abnormal rework is expensed.
FrameworkCost of quality
See it move
Normal rework, the expected level of correction in a process, is absorbed into the cost of good units and never separately reported. Abnormal rework, caused by an unusual event, is expensed directly to the income statement so management can see the loss. On Job 214, €1,200 of extra rework cost traceable to that job is charged straight to the job, not to overhead.
Check yourself
A garment factory's standard cost includes €0.50 per finished unit for routine stitching corrections. One week a faulty machine generates an additional €2,400 in rework costs above the normal level before the fault is identified. Where should these abnormal rework costs be charged?