This document contains an example of calculating abnormal loss from a manufacturing process. 100 units of raw materials costing Rs. 1000 with other expenses of Rs. 600 were introduced to Process A. Normally 10% of units would be lost, but the actual output was only 75 units. The summary provides: 1) Process A account showing raw materials and other expenses as debits and normal loss, abnormal loss, and output transfer as credits. 2) Abnormal loss account showing the process A account as a debit and cash for scrap value and costing profit and loss account as credits. 3) A working note calculating abnormal loss as actual cost of normal output minus normal cost of normal output. Abnormal loss was

1. By
SHIJIN T P
M COM (BF)
Section A
Reg. No:12351047

2. Loss which is controllable and avoidable and which is
in excess of normal limits is called abnormal loss. It is
caused by unexpected or abnormal condition such as
machine break down, carelessness ,accidents, substandard
material etc.
Abnormal wastage = Actual Wastage- Normal Wastage

3. In process A ,100 units of raw materials were
introduced at a cost of Rs.1000.the other expenditure
incurred by the process was Rs.600.Of the units
introduced ,10% are normally lost in the course of
manufacture and they possess a scrap value of Rs. 7
each. The output of process A was only 75 units.
Prepare process account and abnormal loss account

4. pariculars
To, raw
material
To other
expenses
units
Rs
pariculars
Units
Rs
100
1000
By normal
loss
By abnormal
loss
By process
B
(Out put
transfer)
10
70
15
255
75
1275
100
1600
600
100
1600

5. particulars
units
Rs
particulars
units
Rs
To Process
A a/c
15
255
By cash
a/c(15*7)
By Costing
P/L a/c
15
105
15
255
150
15
255

6. 
Working note:
Calculation of abnormal loss
Normal cost of normal output
normal output
= 1600-70
100-10
cost of A L = 1530 15
90
=225
Units of A. L