The allocation between buyer and seller of the costs incurred when materials are rejected is affected by the kind of materials rejected,trade customs,the buyer's cost accounting procedures,and the positions of strength of each organization.

Trade Customs

Practices and guidelines established by conventions between parties in a particular trade or industry.

Cost Accounting

The process of recording, classifying, analyzing, and allocating all costs associated with a process, product, or project.

Materials Rejected

Refers to goods or supplies that fail to meet the quality or specification requirements and are therefore not accepted by the buyer or receiving entity.