In a process costing system loss might be:

Related MCQs

• In some cases, a company might have to pay to dispose of losses in a process. The cost of disposal represents an additional cost to the process. To reflect this in the process account the normal loss is measured at zero but the expected costs of disposal are debited to the process account.
• The disposal cost of abnormal loss is included in the abnormal loss account and therefore in the transfer of the cost of abnormal loss to the statement of profit or loss.
• Process costing provides a system of costing where the following characteristics occur. Identify which of the following are correct:
• A job costing system is usually based on absorption costing principles, and in addition a cost is included for non-production overheads.
• The difference between total actual loss and normal loss is abnormal loss.
• Process costing is used when output is produced in a continuous process system, and it is difficult to separate individual units of output.
• Job costing is a costing method applied where work is undertaken to customers’ special requirements and each order is of comparatively short duration.
• Batch costing is similar to job costing in that each batch of similar articles is separately identifiable.
• The job costing method can therefore be applied in costing batches. The only difference is that a number of items are being costed together as a single unit, instead of a single item or service.
• In Job costing a cost is calculated for each individual job, and this cost can be used to establish the profit or loss from doing the job.