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      Question

      In process costing, 'abnormal gain' occurs

      when:
      A The actual loss is less than the normal loss. Correct Answer Incorrect Answer
      B The actual loss is more than the normal loss. Correct Answer Incorrect Answer
      C There is no loss in the process. Correct Answer Incorrect Answer
      D The process is 100% efficient. Correct Answer Incorrect Answer

      Solution

      Abnormal Gain is a rare situation where the actual output (good production) is more than the expected output. The expected output is calculated after deducting the normal loss (which is unavoidable). This gain is treated as a favorable variance and is valued at the cost per unit of good output.

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