Manufacturing Cost Accounting & Finance worked example

Scrap Accounting Cost at 98% net loss share: a worked example

Push net loss share up to 98% and the picture changes. This example computes every intermediate figure at that operating point. Use it to quantify the period scrap variance charged against a job, line, or cost center.

The inputs for this scenario

  • Scrapped units: 1,200 units (unchanged)
  • Standard cost per unit: 18 $ / unit (unchanged)
  • Net loss share: 98 % (raised for this scenario; the documented default is 85)
  • Disposal and handling fee: 600 $ (unchanged)

Working through the calculation

  • Applying the documented formula (Scrap cost = scrapped units x standard cost x net loss share% + disposal fee) to the inputs above produces each figure below.
  • At this operating point the engine returns 21,768 $ for total scrap accounting cost, the number this scenario is built around.
  • At this operating point the engine returns 18.14 $ / piece for scrap accounting cost per unit.
  • At this operating point the engine returns 21,168 $ for variable scrap accounting cost.
  • At this operating point the engine returns 600 $ for fixed scrap accounting cost adder.

How this compares with the baseline

  • Against the tool's baseline example, where net loss share sits at 85% and the headline result is 18,960 $, this scenario comes in 14.81% above the baseline at 21,768 $.
  • It computes the total accounting loss from scrapped units at standard cost, scaled by the net loss share retained, plus disposal and handling. The value of this scenario is the size of the gap it exposes: that gap, priced out over a year, is the budget you can justify spending to close it.

Results at a glance

  • Total scrap accounting cost: 21,768 $ (headline result)
  • Scrap accounting cost per unit: 18.14 $ / piece
  • Variable scrap accounting cost: 21,168 $
  • Fixed scrap accounting cost adder: 600 $

Run it with your numbers

  • Every input above is editable in the live Scrap Accounting Cost calculator, which recalculates instantly and can be shared with the inputs intact.

Last reviewed 2026-05-12.