Normal Spoilage

Categories: Accounting

You run a grocery store. Once you take delivery of those 800 melons, they're yours. No sell-backsies to the farmer who grew 'em.

You plan to sell them for 5 bucks. But there are always a few hundred that never sell. They spoil. So you predict that you'll make 3 grand from selling 600 of them at 5 bucks. Then there'll be 200 that never sell. They'll get brown and mushy and smell.

Do you cry for those 200 unsold? Nah. They're normal spoilage.

The same notion applies to all kinds of businesses. Not everything sells. Things spoil. And not just the children of actors and actresses.

Find other enlightening terms in Shmoop Finance Genius Bar(f)