Abstract The article discusses a fallacy in accounting for spoiled goods. Spoiled goods arise as a result of imperfections in manufacturing processes. The condition of the goods is such that it would not be economically feasible to correct the imperfections. As a consequence, the goods are sold as seconds at a loss. A loss due to spoilage may be charged to the job or production order on which the loss occurred or it may be absorbed indirectly by all jobs through charging such loss to manufacturing overhead control. If spoilage loss is not normal or a loss can be easily traced to a job which may be special in character, the loss should be charged to the job on which the loss occurred. If spoilage is normal because of the nature of the manufacturing process but irregular in amount from job to job, the loss arising from spoiled goods should be absorbed by all jobs by means of a predetermined manufacturing overhead rate. An exception may be taken to the treatment found in cost accounting publications whereby spoilage loss is absorbed indirectly by all jobs through charging such loss to manufacturing overhead.

Abstract The course program herein offered is a possible path for accounting to follow in seeking its role in answer to the challenge thrown out to business education. It should, perhaps, not be called a program for it is much too incomplete for such a formal characterization. It is intended, rather, as a point of departure from a pattern of teaching which, without question. must be revised in order to meet the demands which are increasingly being leveled at it. It is to be hoped that many different paths will be attempted and there is much evidence in the accounting departments of our universities that such will be the case.