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In each manufacturing process there is a percentage of normal loss.and normal loss is kept while computing the cost and normal loss ratio is assigned to each job.
While Abnormal loss is occured due to some neglegence or by situation and its cost is considered as loss.
for eg, if a person is selling the ice blocks, the melting of an ice block is normal loss but if full or huge portion of block is melt by fire or break into tiny pieces this is called Abnormal loss
Normal loss is the one which is usual, inherent and expected by the nature of operations and within the limit of tolerance set by the entity for human or machine errors and cannot be avoided.
Abnormal loss is the one which is unusual, unexpected or even expected exceeds the normal limits during the efficient operating conditions and can be more likely prevented or avoided.
Normal loss is the one which is incurred during normal business operations and does not represent any abnormal acitivity. Normall loss also represent activities which can be expected to be repeated during the normal course of business.
Abnormal loss is normally due to the reason which is not normally a part of norma business operations. Losses due to power break down or theft will be treated as abnormal because they are not expcted to be repeated in mormal course of business.
