[amp_mcq option1=”Charged to the product cost” option2=”Charged to the profit & loss account” option3=”charged partly to the product and partly profit & loss account” option4=”not charged at all” correct=”option1″]
The correct answer is: A. Charged to the product cost
Abnormal wastage is a type of loss that is not expected to occur in the normal course of business. It is caused by unusual circumstances, such as a natural disaster or a machine breakdown. The cost of abnormal wastage is charged to the product cost because it is a direct cost of production.
The other options are incorrect because:
- Option B: The cost of abnormal wastage is not a normal cost of doing business, so it is not charged to the profit and loss account.
- Option C: The cost of abnormal wastage is not a direct cost of production, so it is not charged partly to the product and partly to the profit and loss account.
- Option D: The cost of abnormal wastage is a real cost that has been incurred, so it is not not charged at all.