Difference between Normal and Abnormal Loss
Normal and abnormal loss concept are associated with processing costing.
Normal Loss
Normal loss is a loss which is very much expected in the industry.
This is inherent loss of the industry and it cannot be avoided. Normal loss
represents the practice environments where all input cannot be perfectly equal
to the output. Normal loss varies from industry to industry.
Normal loss is not valued in the process costing and value
of normal loss is adjusted in output i.e. normal loss is born by the output.
Abnormal Loss
Abnormal loss is a loss which is over and above the normal
loss. Abnormal loss is specifically tracked in process costing to investigate
the reason and appropriate control.
Abnormal loss is valued and separately charged unlike normal
loss it is not adjusted against output rather a spate account of abnormal loss
is opened to account for abnormal loss.
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