Question

An abnormal gain in a process occurs in which of the following situations?

• A. When actual losses are greater than the normal loss level
• B. When costs are reduced through increased machine speed
• C. When actual losses are less than the normal level
• D. When the process output is greater than planned

Answer 1

Answer: (C)

When actual losses are less than the normal level

Normal loss is occurred during the process of manufacturing of any product. Its an standard loss which is uncontrollable.

When the actual output is more than the standard output due to lesser normal loss, a difference is considered as abnormal gain.

For example:

Input 1000 units

Normal loss 5%

Actual output 960 units

Solution:

Input 1000 units

Less: Normal Loss 5% 50 units

----------------

Standard output 950 units

Actual out put 960 units

Abnormal gain 10 units