Business, Legal & Accounting Glossary
Losses arising in business that should have been avoided.
Loss realised over normal loss is called an abnormal loss. Abnormal loss arises because of factors such as abnormal working conditions, bad working conditions, carelessness, rough handling, lack of proper knowledge, poor quality raw materials, machine faults, accidents etc.
The value of an abnormal loss is assessed on the basis of the production cost with which the profit and loss account is charged.
Value of abnormal loss = (Normal cost of normal output/Normal output) X Abnormal loss qty.
Process Loss = Normal process loss + Abnormal process loss
An abnormal loss is an unanticipated loss. Abnormal loss is a controllable loss and thus can be avoided if corrective measures are taken. Therefore, abnormal loss is also called an avoidable loss.
The abnormal losses related to charges associated with the prepayment of public debt and additional costs pertaining to the sale of the book’s publishing division, the company said.
The sale would result in an abnormal loss of £5 million for Woolworth’s, which Kunkel stated may offset interest cost savings.
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This glossary post was last updated: 10th July, 2019 | 8 Views.