Question

What is abnormal loss and its formula?

Answer 1

Abnormal loss is regarded as the loss that takes place in a business due to certain unexpected events such as natural calamities (earthquake, fire), theft of goods, poor quality of raw materials or failure of machine or equipment.

The formula for calculating abnormal loss is as follows:

Abnormal loss = {Normal cost at normal production / (Total output – normal loss units)} × Units of abnormal loss.

Also read:

• Abnormal Loss
• Balance Sheet Vs Profit Loss Account