Accounting For Losses  
In process costing, we can often found the output from a process is less than the input. Where the output from a process is less than the input, there is therefore a loss.  
Basically there are two types of losses in Process Costing:


Normal Loss  
· Normal loss is unavoidable losses arising due to the nature of the material or the process


Treatment of Normal Loss are as follows:


ILLUSTRATION ofNormal LossFor Company A which manufactured drink, the production manager usually experiences a 10% loss of direct materials in the production process. In August ’07 the details/data are as follows:
Required: (a) compute the number of litre lost in the process; (b) compute the cost per litre of drink produced; (c) write up the process cost account
Solution: (a) The number of litres lost in the process: =Total direct materials x % loss=2,000 x 10%=200 (b) The cost per litre of drink is computed as follows: =Total Cost/Total output =$47,000/1,800 litres =$26.11 per litre Notes: Total Cost=(Sum of direct costs plus overheads) Total Output=2,000litre x (10010%) =1,800 litres © Process Cost Account as follows:
