The Type of Wastage that should not affect
the Cost of Closing Stock is *
A) Abnormal Wastage
O B) Normal Wastage
C) Standard Wastage
OD) Seasonal Wastage
Answers
The type of wastage that should not affect the cost of closing stock is normal wastage. Normal wastage refers to the expected loss of material during the production process, which is unavoidable and inherent to the production process. It is a cost of production that is taken into account when determining the cost of goods sold and the value of the closing stock. Normal wastage is considered a part of the cost of production and is absorbed by the business.
On the other hand, abnormal wastage, standard wastage, and seasonal wastage are types of wastage that may affect the cost of closing stock. Abnormal wastage refers to the loss of material due to unusual or unforeseen circumstances, such as accidents, theft, or natural disasters. Standard wastage refers to the expected loss of material that is determined based on a pre-established standard. Seasonal wastage refers to the loss of material that occurs due to seasonal factors, such as changes in weather conditions or demand patterns.
In summary, normal wastage is expected and inherent in the production process, and its cost is absorbed by the business. Abnormal wastage, standard wastage, and seasonal wastage may affect the cost of closing stock, as they represent additional costs that are not a part of the normal cost of production.
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