Normal Process Loss
This means the usual percentage of wastage arising in a particular process or operation. It is unavoidable because of nature of the material or the process. It also includes units withdrawn from the process for test or sampling.
The loss due to normal wastage should be charged to the effectives, i.e. the good units arising out of the process. Thus, cost of spoiled and lost units is absorbed as an additional cost of good units produced by the process. In this connection the following points must not be lost sight of:
(a) In some cases the defective or scrapped units possess some value. This amount should be credited to the process concerned.
(b) In case the scrap is of very small value, it will be inexpedient to credit each process with the amount which the scrap can realize. It will be better to credit the total proceeds of the scrap in such a case to Works Overheads Account. In any case loss in weight or volume must be shown in the process account.
(c) In some processes a proportion of the output must be re-worked either in the same process or an earlier one. The value of such output is note more than the value of crude materials to which it corresponds. The relevant process should be credited with the value of such crude material and should be charged to the process to which such material is relegated.
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