Cost sheet

hi,

    i have a few doubts regarding cost sheet which are as follows:

    1)how is abnormal loss of materials different from normal loss?

    2)what do you mean by "estimating expenses" as far as office overhead is concerned?

    3)what is the treatment of "cost of idle time in factory"?

  

Replies (8)

normal loss is that which can not be stopped. example is leakage , evaporation etc,

where abnormal loss r that which can be stopped with the efforts example- lossdue to theft, fire etc.

normal loss will icrease only the cost i.e. only qty. will be decreased 

1. Normal loss is the loss which are generally uncontrolable or unavoidable. These will be tend to occur. example of normal loss is evaporation durring Boiling of milk or furniture scrap.

On the other hand Abnormal loss are controllable, hence avoidable. Example theft  or fire etc. these are generally due to human error.

2. expected expenses  means estimated cost of Production which are estimated on the basis of advance actual unit to be produced. in simple terms these are the prediction of cost...

3. Idle time are those for which no production are made but wages are paid.. Its teatment are as

    *       Normal & uncontrollable :- charged to Overhead being common in nature.

     *      Abnormal & controllable :- Tr. it to Costing P/L

1) Normal loss means estimated loss using previous records and experience

   Abnormal loss is loss incurred over and above normal loss.

   i.e., Abnormal loss = Actual loss (-) Normal Loss

 

3) Idle time is of two types: a)Normal idle time and b) abnormal idle time

   Normal idle time is recoverd by inflating labour / overhead rate

   Abnormal idle time is accounted on the basis of the reason.

yes i agree with navin

Navin Jaiswal's answer is preferable ...........

Pl. refer Cost Accounting Standard on Material Cost  (CAS6)  issued by ICWAI,

 

 

 

i m agree with navin

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