Loss of material arising from an abnormal cause, such as theft or fire in the stores, should be treated in cost accounts by:

Correct answer: C) Charging it to the Costing Profit and Loss Account

Explanation

Abnormal losses are avoidable and are not part of the normal cost of production. Including them in product cost would distort the cost of output, so they are written off to the Costing Profit and Loss Account. Normal losses, in contrast, are absorbed by the good units.