What is normal loss in cost accounting?
· Normal loss is unavoidable losses arising due to the nature of
the material or the process * The reasons for such loss in output
can be due to the following: * Evaporation; * Breakage; * Scrap due
to high quality needed; * Rejection on inspection; * Defective
Units; * Loss inherent in large scale manufacturing; * Chemical
change * Residue Material * Examples of normal losses are metal
turnings, off-cuts, metal borings, edges, shreddage and ends. * The
quantity of normal loss anticipated is determined from past
experience and from the material specification. * The cost of
normal loss is absorbed by the completed output. * The value of
scrap of normal loss units is deducted from the direct material
cost. Normal loss never receives a share of the process cost.