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Analysing Statement of Profit and Loss

In process co...

Question

In process costing, the abnormal loss is treated as _________ cost and is written off to the profit and loss account.

A

unit

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B

period

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C

future

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D

process

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Solution

The correct option is C period
In every production activity, a predetermined percentage is considered as normal loss. If the actual loss is more than the predetermined loss, difference is considered as abnormal loss which is debited to profit & loss account as a period cost.

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