The current study proposes a new method to account for production spoilage in process costing system, not previously discussed in cost accounting literature and/or textbooks. It differs from traditional methods discussed in cost accounting textbooks in determining normal spoilage units and assignment of production cost. The study used data from a real factory that makes men’s suits for January 2018 to illustrate and explain the proposed method and its impact on cost reduction. The obtained results prove the study proposition that traditional methods to account for production spoilage overstate normal spoilage cost, and hides or understate actual abnormal spoilage. The proposed method reduced normal spoilage cost by 27%, compared to traditional methods. Thus, the significant reduction in normal spoilage resulted also in a cost reduction of good units manufactured. In addition, the abnormal spoilage cost under the proposed method increased by 35% thus, it would be noticeable by management to focus on, control and eliminate. The study recommends that manufacturing firms adopt the proposed method to account for production spoilage as it is more accurate and helps management focus on production spoilage and take corrective actions to control and eliminate.