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Normal and Abnormal Losses

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Normal and Abnormal Losses

  • This topic has 1 reply, 2 voices, and was last updated 8 years ago by John Moffat.
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  • August 2, 2017 at 7:20 am #399953
    fredymaila
    Participant
    • Topics: 48
    • Replies: 129
    • ☆☆

    Hello Mr. Moffat,
    I crossed a question including a statement ‘20% of materials is provided for Spillage’.
    This was then used as normal loss % but I expected it to have been abnormal loss because Spillage is actually abnormal loss.
    Then I thought, could it be because of the provision ?
    Help me resolve this sir.

    August 2, 2017 at 8:33 am #399973
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54814
    • ☆☆☆☆☆

    A normall loss is an expected loss. If 20% is provided for spillage then it means they are expecting a loss of 20% and it is therefore a normal loss.

    Any abnormal loss or gain will only occur if the actual spillage turns out to be more or less than 20%.

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