ECONOMICS

Detailed explanation-1: -Normal loss means that loss which is inherent in the processing operations. It can be expected or anticipated in advance i.e. at the time of estimation. Accounting Treatment: The cost of normal loss is considered as part of the cost of production in which it occurs.

Detailed explanation-2: -Normal Loss: The fundamental principle of costing is that the good units should bear the amount of normal loss. Normal loss is anticipated and in a process it is inevitable. It is included in total cost of the product due to which cost per unit is increases. The cost of normal loss is therefore not worked out.

Detailed explanation-3: -Accounting Treatment The cost of typical loss is included in the cost of production. As a result, the cost of normal loss absorbs the units of items produced, raising the per-unit cost. Furthermore, when any sum is recovered as sale proceeds, the cost of the operation is lowered.

Detailed explanation-4: -The normal loss means a loss which is inherited and can not be avoided. It should also be considered while valuing the closing stock. For example: If a certain amount of oranges are consigned, some of them will be destroyed in loading and unloading whereas some of them will not be in a state to be sold.