CMA Intermediate · Cost Accounting · Process Costing
In process costing, the cost of a normal loss that is discarded with no realisable value is treated as:
Normal loss with nil scrap value is absorbed by the good units of the process, because the loss is expected and unavoidable. Its cost raises the cost per good unit. It is not charged to the Costing Profit and Loss Account, which is where abnormal loss is written off.
- AA charge to the Costing Profit and Loss Account
- BPart of the cost of the good units produced in that processCorrect
- CA separate debit to the next process only
- DA cost borne only by abnormal gain units
Explanation
Normal loss is an expected, unavoidable loss. Its cost is absorbed by the good output, which raises the cost per good unit. Writing it off to the profit and loss account is the treatment reserved for abnormal loss.
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