CIMA BA2 · Chapter 5 · Question 10 of 10
In a process account, how are normal losses and abnormal losses valued?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Normal loss at its scrap value (if any); abnormal loss at the same cost per unit as good output
Explanation
Normal loss is expected and its cost is absorbed by good output, so it is credited to the process account only at its scrap value. Abnormal loss is unexpected and is valued at the full cost per unit of expected output, so that it does not distort the cost of good units and is highlighted for management attention.
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