Question

Abnormal loss is equal to .............. .

Hint:

Abnormal loss = avoidable extra loss beyond normal limit.

Answer 1

In process costing, some loss of material is unavoidable and is treated as normal loss.
This normal loss is expected due to factors like evaporation, wastage, or spoilage during the process.
However, if the actual loss is more than the normal loss, the excess loss is called abnormal loss.
Therefore, abnormal loss is calculated as:
Abnormal Loss = Actual Loss – Normal Loss
This extra loss is charged separately to the Costing Profit and Loss Account to find the true cost of production.
So, abnormal loss helps in identifying inefficiencies in the process.