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12. When compared with normal spoilage, abnormal spoilage is:

a. more frequently caused by factors that are inherent in the manufacturing process.b. given the same accounting treatment as normal spoilage.c. not included as part of the cost of goods produced.d. not typically influenced by the “tightness” of production standards.

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Question added by mohamed Hakim CMA CPA Candidate , Accounting Manager , Andersen saudi arabia
Date Posted: 2015/05/11
عبدالحميد عفلي
by عبدالحميد عفلي , متصرّف مسؤول المحاسبة العامة والنزاعات الجبائية , الشركة الجهوية للنقل بالقيروان

c. not included as part of the cost of goods produced

Mir Mujtaba Ali
by Mir Mujtaba Ali , Internal Audit Manager , Confidential

<<<<<<<<<

c. not included as part of the cost of goods produced

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Deleted user
by Deleted user

Answer C  is the right option . Not included as a part of  COGM .

Ayman Esa Mustafa Farrag
by Ayman Esa Mustafa Farrag , مدير مالي , شركة الصفوف

C is correct ,,,,,,,,,,,,,,,,,,,,,

Ahmed kandil
by Ahmed kandil , Cost Controller , Battour Holding Cpompany

Answer ( C)is the correct answer .............

Laiq Saad
by Laiq Saad , Senior Accountant , Etihad Motqn Contracting Co.

Answer C is correct abnormal spoilage is not considered as part of cost as its not usual in normal course of business operations

حسين محمد ياسين
by حسين محمد ياسين , Finance Manager , مؤسسة عبد الماجد محمد العمر للمقاولات العامة

agree with answers ..............................................

Syed Tanveer Ali
by Syed Tanveer Ali , Account Manager , Myrkott Animation Studio

Abnormal spoliation or Abnormal Loss is that during continuously mass-produced through one or more processes. 

This is when a loss occurs over and above the normal expected loss. This maybe due to reasons such as faulty machinery or errors by labourers.

More precisely look at the formula

Cost per unit = Cost of inputs / Expected output in units

If there is an abnormal loss occurs it will reduce the output units which were expected at the beginning of the process and ultimately increases the cost per unit of the finished Goods..

 Those who are saying it’s not part of the COGS they must know that it is process costing it’s not ABC or Direct costing/margin costing

Abnormal Loss will be added to the units of loss during the process and when number of units in denominator which means less the units the more increases the cost per unit. So Ultimately

 

More appropriate to this Scenario is

Answer A

Like few factors are embedded in the process that caused Abnormal Loss

ايمن محمد عاطف محمد
by ايمن محمد عاطف محمد , Director of the control and regulation unit , ACOLID

a. more frequently caused by factors that are inherent in the manufacturing process

Normal spoilage occurs even in the best of production environments. No matter how efficiently you work, you still incur normal spoilage. That’s because there are limitations to any production process.

Abnormal spoilage is spoilage beyond what you normally expect in production. Accountants also define the term as spoilage that wouldn’t happen if you operated efficiently. If you have spoilage you can avoid, you have abnormal spoilage.

Elanchelvan Muniandy
by Elanchelvan Muniandy , SENIOR GROUP MANAGER, FINANCE, HR & ADMIN , SS BASE GROUP

b

abnormal spoilage is normally referred to as unexpected spoilage. Although these spoilages do not have a standard computation method, these are treated as usage and thus should be treated as normal spoilage. However, these abnormal spoilage could not be included in the standard costing as in most cases they do not have a definite computation or occurrence.

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