Which one of the following statements is true?
A) Abnormal losses arise when there are losses that are lower than the expected losses from a process.
B) When abnormal losses arise, both normal and abnormal losses are valued in the process account.
C) Abnormal losses are valued at the unit cost of the expected finished output from a process.
D) Abnormal losses are part of normal production and so are rolled up into the expected cost of expected finished output from a process.

Question

Quizplus · Accepted Answer

Abnormal losses are considered unexpected and are not part of the standard production costs. They are valued at the unit cost of the expected finished output from a process, which means the cost per unit is calculated based on the normal production costs, and the abnormal loss units are valued at this rate. This approach helps in assessing the financial impact of the losses that exceed the normal wastage expected in a production process.

Which One of the Following Statements Is True