The correct answer is: A. Abnormal wastage
Abnormal wastage is a type of loss that is not expected to occur in the normal course of business. It can be caused by factors such as accidents, equipment breakdowns, or operator error. Abnormal wastage is not included in the standard cost of production, and it is therefore treated as an abnormal loss.
Normal wastage is a type of loss that is expected to occur in the normal course of business. It is caused by factors such as shrinkage, evaporation, and spoilage. Normal wastage is included in the standard cost of production, and it is therefore not treated as an abnormal loss.
Abnormal gain is a type of profit that is not expected to occur in the normal course of business. It can be caused by factors such as favorable market conditions, cost savings, or improved efficiency. Abnormal gain is not included in the standard cost of production, and it is therefore treated as an abnormal gain.
Normal gain is a type of profit that is expected to occur in the normal course of business. It is caused by factors such as favorable market conditions, cost savings, or improved efficiency. Normal gain is included in the standard cost of production, and it is therefore not treated as an abnormal gain.
In conclusion, the cause of increase in cost per unit under process costing is abnormal wastage. This is because abnormal wastage is a type of loss that is not expected to occur in the normal course of business, and it is therefore not included in the standard cost of production. As a result, abnormal wastage will cause the cost per unit to increase.