Question

Difference between normal and abnormal loss in process costing

Answer 1

NORMAL LOSS :

1)Normal Loss cannot be avoided and is uncontollable.

2)This loss is compulsory in the process of production or due to nature of material used.

3)Normal Loss should always be valued at scrap value(if any).

4)This Loss will be borne by the good units.

ABNORMAL LOSS :

1)Abnormal Loss can be avoided.

2)This loss occurs due inefficiency of the workers,bad quality of materials,accidents etc.

3)This loss should always be valued at cost per unit.

4)This loss will be transferred to Costing Profit and Loss A/C.