Question

The monetary value attributed to normal losses in a process should be :

• A. A share of the process costs according to the stage of completion of the losses
• B. A nil value with no other monetary adjustments under any circumstances
• C. A full share of process costs on the same basis as good output
• D. A nil share of process costs which have been reduced by the scrap value of the normal loss

Answer 1

The correct option is D A nil share of process costs which have been reduced by the scrap value of the normal loss

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

While ascertaining the cost for the process, zero value to be assigned to the units and cost of the normal loss units to be absorbed to the normal output produced. If any scrap value is received against the normal loss units, the amount will be reduced from the cost of the process.