Skip to content

CMA Foundation · Fundamentals of Financial and Cost Accounting · Classification of Costs (CAS 1)

Which of the following would be treated as a normal cost rather than an abnormal cost in a manufacturing unit?

Wastage within the standard allowance for a chemical process is a normal cost, because it is expected under normal operating conditions and is absorbed into the cost of good output. Losses from fire, strikes or negligent breakdowns are abnormal and are charged to the Costing Profit and Loss Account.

  1. ALoss of stock due to fire
  2. BWastage within the standard allowance for a chemical processCorrect
  3. CCost of idle time due to a prolonged power strike
  4. DLoss from machine breakdown caused by negligence

Explanation

Wastage within the standard allowance is expected under normal operating conditions and is absorbed into the cost of good production. Fire, strikes and negligence-driven breakdowns are unusual events and are abnormal costs charged to the Costing Profit and Loss Account.

Did you get it right without looking?

One question tells you little. A timed set on Classification of Costs (CAS 1) shows your real accuracy, how long you take and where you lose marks.

Practise Classification of Costs (CAS 1)Free diagnostic mock

More Classification of Costs (CAS 1) questions