In general, it is presumed that normal spoilage occurs halfway between the beginning of the production process and the inspection point in the production cycle. This is because there is no easy way to determine where the spoilage has happened until the inspection has occurred.

Spoilage can occur at any stage of the production process.  Rework: Rework is unacceptable units of production that are subsequently repaired and sold as acceptable finished goods.  Scrap: Scrap is material left over when making a product. Spoilage should not be confused with scrap. Scrap arises at the initial stages of production operations whereas spoilage takes place more towards the finishing production stages with larger loss of added value to the cost of material used. The decision to scrap or rework an item depends on its incremental benefits. If the reworked units yield a greater... Show more

Spoilage can occur at any stage of the production process. 
Rework: Rework is unacceptable units of production that are subsequently repaired and sold as acceptable finished goods. 
Scrap: Scrap is material left over when making a product.
Spoilage should not be confused with scrap. Scrap arises at the initial stages of production operations whereas spoilage takes place more towards the finishing production stages with larger loss of added value to the cost of material used.
The decision to scrap or rework an item depends on its incremental benefits. If the reworked units yield a greater benefit than selling them as scrap, then the decision to rework can be considered.

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