No, you don't report $6.00 as a loss, the "loss" is included when you report the total material cost.
You would not report a loss for the material, but you would report the material for the scrapped pieces as an expense.
Only the pieces that you sell is counted as income.
It works out the same.
If you purchase 10 pieces at 3 each, you spent $30 for material.
That is an expense.
You don't say what they sell for, but lets say $10.
So you expect to make $100.00, but you have to scrap 2 so you only make 80.00
The two pieces you scraped should be included in your material costs.
You don't expense only $26 because you scrapped two, you expense the total raw material expense whether they result in a marketable product or not.
If you sell 8 for 80.00 and you had 30.00 material expense, your profit would be $50.00.
You don't think "Each piece is 7.00 profit and I only made 8 so my profit is $56.00".
Don't base it on material used for only the pieces you could sell, base it on all the material you went through.
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