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.
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Normal and Abnormal Losses
8y ago#1A 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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