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Question

In a process account, the costs which will be borne by the good production units include _____.

1.       Normal loss

2.       Abnormal Loss

3.       Cost related to the process

A Only A Correct Answer Incorrect Answer
B A and B Correct Answer Incorrect Answer
C A and C Correct Answer Incorrect Answer
D B and C Correct Answer Incorrect Answer
E All of the above Correct Answer Incorrect Answer

Solution

The good production costs will include the cost related to the process and also absorbs the normal loss. If Normal Loss is physically present in the form of scrap, it may have some value and will be credited to Process A/c. If Actual Loss > Normal Loss : the difference is abnormal loss . Abnormal Loss is not absorbed by good production, rather it is transferred to Costing Profit & Loss A/c

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