Abnormal wastage accounting treatment formula. Bye-Products and their Accounts 8.

Abnormal wastage accounting treatment formula Process Costing is Applicable in Industries 6. 12). Process Costing-lll | Equivalent Production | Normal & Abnormal Wastage | Process Account Opening & Closing WIP is Given | Cost Accounting | B. Normal loss happens mostly as a result of natural factors such as drying, evaporation, leakage, shrinking, or the perishing of a few items as a result of handling products in large quantities. Principles 9. For full course, visit: https://academyofaccounts. Form # 1. Mar 29, 2022 · Abnormal spoilage is the amount of waste or destruction of inventory that a firm experiences beyond what is expected in normal business operations or production processes. To find the cost per unit after the normal loss, the formula used is: Cost per Unit= (Total cost+ Expense incurred) / (Total Quantity - Normal Loss) 2. With reference to Scenario 2, calculate the value of the closing stock in the process if 13 700 completed units were transferred out. Joint Expenses, Separate Expenses and Bye-Product 10. Note In handling transactions relating to abnormal loss as adjustment at the end of the accounting period, we assume that the proceeds are receivable, expenses are payable and insurance amount is receivable unless otherwise stated. Meaning of Scrap 1. They are treated as a part of the production cost and are included in the cost of production. B is incorrect. Treatment of Normal Loss in Process Accounts Normal losses are those which we can not stop. 2. Fixed production Feb 5, 2020 · ACCOUNTING TREATMENT OF ABNORMAL IDLE TIME . Then compute the cost of production per unit of the relevant process after considering the normal loss but assuming no abnormal loss. Abnormal Wastage= It will be charged to costing profit and loss a/c. Example. Abnormal waste, storage, and selling costs are all usually recognized as expenses. Accounting Treatment The treatment/adjustment of normal and abnormal parts of various material variances would be as follows . This Standard provides guidance on the Aug 2, 2023 · The value of stocks is not inflated during abnormal loss. This may be due to reasons such as faulty machinery or errors by labourers. For every 100 units of Ans. Following are its main example. It provides costs that are usually included in inventories. The cost of wastage and scrap are merged with the process cost so that the good units produced bear their cost through averaging. According to I. These types of Spoilage are expected, and therefore these are termed normal in accounting theory. Abnormal Waste: It is valued as if the output is good. Determining the root cause of abnormal loss is difficult at many times and therefore requires skilful and more significant investigation. This may be due to reasons such as evaporation, testing or rejects. The actual waste is compared with standard waste and remedial action is taken to control abnormal waste. Mar 7, 2024 · Abnormal spoilage can be identified as any spoilage that occurs beyond what is considered as the normal amount. Advantages 11. Defining Normal and Abnormal Spoilage Normal spoilage refers to the expected degradation or loss of goods during the Sep 16, 2024 · Calculation for Abnormal Loss. while abnormal loss is transferred to the costing P&L. A terminology, Scrap is discarded material having some recovery value which is usually disposed of without further treatment. In accounting, abnormal spoilage is considered an avoidable cost, and it is typically not part of the standard production cost. (f) Regular information about resources: Regular and updated information on Briefly explain the accounting treatment of normal and abnormal losses. To treat abnormal wastage, first compute the normal loss. Loss in Weight and Sale of Scrap 3. The waste may or may not have any value. Example: by theft or loss by fire, flood, earthquake, war, accidents in transit, etc. 13). Here are the steps and formulas used in the calculation: Document Description: Treatment of Normal and Abnormal Loss of Materials for B Com 2025 is part of Cost Accounting preparation. Com/M. Click here if you want to learn about the treatment of abnormal loss. A primary issue in accounting for inventories is the amount of cost International Accounting Standard 2 Inventories Objective 1 The objective of this Standard is to prescribe the accounting treatment for inventories. Apr 25, 2024 · Abnormal Spoilage. Accounting Treatment: Waste has no value. Hence, Abnormal Loss = 4,000 Liters. Disadvantages. Accounting Treatment: Normal Wastage: Cost of normal waste is absorbed by good production units. Handling costs, transport, and administrative costs. Abnormal spoilage is simply any amount in excess of the calculated normal spoilage. The value of an abnormal loss is calculated as in the process account by using the formula for transferring to Profit and Loss account. This Ind AS provide the guidance for determining the cost of inventories and for subsequent recognition as an expense. It is sure that after cutting of tree, weight of wood will decrease. Abnormal waste is undesirable waste exceeding the normal loss set aside. 16(a)). Types 4. Why Should Businesses Pay Attention to Spoilages? The value of abnormal loss is calculated with the help of the following formula: All cases of abnormal waste should be thoroughly investigated and steps taken to prevent their recurrence in future. This occurs because of carelessness on the part of the worker or the management, defective scheduling or designing, sabotage etc. Accounting Treatment: Standards are established for waste. Some losses are accidental or can be caused by carelessness. Normal Loss: Normal loss means that loss which is inherent in the processing operations. Sale value of scrap is credited to costing profit and loss a/c as an abnormal gain. BN Gaur, Asst. 5. Normal Waste: This is the inherent waste while manufacturing. Normal wastage: Charge to production by inflating the unit price of material used in such as way that total cost is recovered out of the smaller quantity actually used. So, this loss is normal loss. theft, fire, careless handling, etc. Definition of Process Costing: CIMA defines Process Costing as "the costing method applicable where goods or services result from a sequence of continuous or repetitive operations or processes, costs are averaged over the units produced during the period Abnormal spoilage, on the other hand, refers to waste that could have been avoided. Normal waste is estimated based on past data and does not affect cost calculations, while abnormal waste is calculated using a formula and its costs are not included in the product cost to allow for accurate cost comparisons over time. Accurate treatment of losses ensures fair cost distribution and highlights areas for process improvement If the actual process loss (wastage), is less than the normal process loss (wastage), then it is considered an abnormal gain or effective. Losses in the form of waste, scraps, spoilage and defectives are inherent and inevitable with any manufacturing activity. The total cost of abnormal process loss is credited to the process account from which it arises. ) Objective 1. Nov 13, 2019 · Control of Waste: A waste report is prepared periodically. 4,500/90). Treatment of Cost Variances in Accounts: For firms that use standard costing system, accounting for variances in internal reporting at the end of the period is an important decision. Accounting Treatment. Abnormal spoilage exceeds the normal or expected rate of spoilage. b) In the process of production for such sale. It may be visible or invisible. Statement of Process Costs and The below mentioned article provides a note on waste. Abnormal spoilage refers to the unexpected or excessive amount of waste that occurs during the production process beyond what is considered normal or acceptable. Meaning of Scrap Jun 8, 2023 · Treatment of Abnormal Gain in Process Costing. Accounting Treatment of Normal and Abnormal Losses. Wastage may be normal waste incidental to manufacturing activities or abnormal waste which is in excess of material loss over the normal losses Aug 14, 2023 · Abnormal spoilage can be identified as any spoilage that occurs beyond what is considered as the normal amount. Abnormal spoilage occurs when a defective unit is the result of operator, machine or Jun 19, 2020 · Waste can be normal and unavoidable, or abnormal due to issues like defective materials or accidents. Mar 2, 2023 · Treatment of Abnormal Wastage. The abnormal spoilage could have been avoided if the job or process went according to plan. VAO = AO × NCNO/unit = 9,400 Units × 4. Meaning of Inventory: - Inventory are Assets which is a) Held for sale in ordinary course of business. This is because the costs allocated to the above normal output are in excess of those incurred and the benefit of the excess output (abnormal gain) is transferred to the credit of the abnormal gain account (and, subsequently, to the income statement). Let’s take a look at an example. Abnormal Spoilage. So, use of bad quality raw material is the reason of abnormal loss. Treatment Of Abnormal Wastage Abnormal wastage should be treated in the PAS 2- INVENTORIES It prescribes the accounting treatment for inventories; It gives guidance on determining the cost of inventories and their subsequent recognition as an expense; It prescribes the measurement rules including the net realizable value It gives guidance on the cost formulas (FIFO and weighted average). M. How should they be treated in the process of manufacture of a product? The following article will guide you about how to calculate cost variances in accounts. It is caused by unexpected or abnormal condition such as machine break down, carelessness ,accidents, substandard material etc. Spoilage: Both normal loss and abnormal loss are important concepts in cost accounting and production management. The total cost of normal waste is distributed among the good units of output. Abnormal spoilage is the amount of inventory waste or destruction that a company experiences that is greater than what is expected in normal business operations or production processes. Sale of some Part of Process Production 4. Jun 25, 2024 · Treatment of Abnormal Loss in Process Costing. 4. Ans. Abnormal losses, stemming from unforeseen events or irregularities in the production process, require careful consideration in terms of valuation. Abnormal Spoilage Any wastage which is more than normal spoilage will be abnormal spoilage. of an abnormal gain is debited to the process account. 1 and the total costs incurred in that process amount to Rs. Abnormal gain Accounting Treatment:-Normal Wastage = It should be distributed over goods output increasing per unit Cost. It can be expected or anticipated in advance i. During the accounting period If the journal entry for recording the normal loss stock is being recorded any time during the accounting period, then Purchases a/c has to be credited since the Trading a/c and Cost of Goods sold a/c would not be available in the books of accounts as they are accounts that are created only towards the end of the accounting period. You can calculate for normal wastage/spoilage amount using the following formula: the total number of spoiled units, divided by the total units produced, multiplied by 100. You can calculate normal loss by using this simple formula: Abnormal Loss = Actual Loss − Normal Loss. When normal loss incurs the good units absorbs the cost of the lost units in that way the cost of production get inflated. orgWhatsapp : +91-8800215448Explained the procedure and concept of valuation of abnormal loss, abnormal gai Following are the forms of material losses: 1. Accounting Treatment: The accounting treatment of waste depends upon whether the waste is normal or abnormal. The standard provides guidance on the determination of cost and its subsequent recognition as an expense, including any write-down to net realisable value. Definition of Process Costing 2. Normal losses are a part of the production process and are accounted for in the cost of production, while abnormal losses are treated as a separate item in the cost accounting records and are charged to the profit and Sep 14, 2023 · Calculation of Abnormal Loss = Actual Loss – Normal Loss = 9,000 Liters – 5,000 Liters. 1 day ago · This helps minimize the risk of abnormal spoilage, promoting the consistent production of quality goods and contributing to production efficiency while reducing unnecessary waste and additional costs. Simple Process Account 2. For abnormal loss, you may prepare 500 smoothies using the fruit you ordered for 60. These are natural wastage. Understanding and differentiating them helps businesses in better inventory management and cost control. Mar 19, 2022 · Waste: It is the portion of raw material which is lost during storage or production and discarded. 21/unit = 39,574 39,539 [value has been adjusted to accommodate for differences on account of the rate being approximated to two digits ] Jan 29, 2023 · The accounting treatment differs according to waste being normal or abnormal. Like this, all type of production needs some of wastage. The accounting treatment differs according to waste being normal or abnormal. Accounting Treatment: ADVERTISEMENTS: The cost of normal loss is […] Accounting Treatment of Normal and Abnormal Losses. Solution. Process Losses and Gains. Show the outstanding expense on abnormal loss stock on the liabilities side of the balance sheet. Treatment of Abnormal Loss in Process Accounts All those losses which happen due to abnormal reasons are called abnormal losses. These losses can be In this video you will study following topics:* Normal Wastage* Abnormal Wastage* Abnormal EffectivenessAbove topics are discussed with their accounting trea The realizable value associated with the waste is deducted out of the cost of process to get the cost of output. Responsibility for abnormal wastage should be fixed on purchasing, storage, production and inspection staff to maintain standards. Com/BBA/ In this article we will discuss about:- 1. The value of abnormal loss is calculated with the help of the following formula: All cases of abnormal waste should be thoroughly investigated and steps taken to prevent their recurrence in future. Normal Losses: Normal losses are inherent in the production process and are unavoidable. Abnormal Gain –To obtain equivalent units, abnormal gain is deducted. The decision influences both inventory valuation and income measurement. When manufacturing processes go wrong or materials have defects, an abnormal about of waste or spoilage is produced. 4. Such losses are more or less abnormal. So waste is a type of material loss which arises in the course of production and has no value. Meaning and Definition of Process Costing 2. Further, it is not subsumed by the units of goods produced. Cost of abnormal process loss is not treated as a part of the cost of the product. It is an example of abnormal Spoilage, which was not predetermined or expected. It will be better to apportion the idle time costs to different departments so that a clear picture may be available to the Oct 21, 2022 · This calculation will give the total abnormal wastage. Normal spoilage is the standard amount of waste or scrap that is caused by production, and which is difficult to avoid. It includes both normal and abnormal loss. IAS 2 also provides guidance on cost formulas that are used to assign costs to inventories. The objective of this Standard is to prescribe the accounting treatment for inventories. The gain being abnormal in nature is transferred to the Profit and Loss a/c, thereby closing the Abnormal Gain a/c. Normal losses are the expected losses that occur in the production process, while abnormal losses are unexpected losses that occur due to reasons such as theft, fire, etc. The cost of abnormal loss is not added to the cost of production. For example, if you doing the business of timber on the basis of their weight. Journal entry to transfer the loss to abnormal loss account: Abnormal loss A/C [Dr] Oct 29, 2021 · Objective of IAS 2 The objective of IAS 2 is to prescribe the accounting treatment for inventories. The accurate cost of output can be computed after taking the losses into account. Bye-Products and their Accounts 8. Abnormal waste Abnormal Wastage: Suppose 100 units of an article are introduced in Process No. Accounting Treatment for Abnormal Loss. SCOPE IAS 2 applies to all inventories Abnormal loss is regarded as the loss that takes place in a business due to certain unexpected events such as natural calamities (earthquake, fire), theft of goods, poor quality of raw materials or failure of machine or equipment. Abnormal Spoilage in Accounting. However, any abnormal quantities of wasted materials or other inefficiencies are charged to profit or loss as they are incurred (IAS 2. Abnormal Loss. Waste or Wastage 2. Raw materials, overhead, and direct labor costs. Abnormal wastage: Transfer to costing Profit and Loss A/c. The shortfall in the scrap value of normal wastage is debited to Abnormal Scrap or waste that should have been avoided. The loss on consignment must be characterised as normal or abnormal in order to determine the right accounting treatment in the consignor’s accounts. The abnormal part of the variance is transferred to the costing profit and loss a/c thereby eliminating it from normal cost. 1. While in the abnormal loss the cost of abnormal will be ascertained by using the formula which will learn in detail. We shall learn them in the detail with the example. , wastage may be visible or invisible wastage. Meaning of Wastage Wastage may happen during the time of production. Actual wastage is recorded and variation from standards is reported. Abnormal Loss can be calculated as: Units of Abnormal Loss = Expected Output – Actual Output May 1, 2020 · #abnormalwastage#abnormalwastageincostaccounting#meaningofabnormalwastage 2. Abnormal waste: The abnormal waste is transferred to costing profit and This is the term used to describe normal expected wastage under usual operating conditions. What Is the Accounting Treatment for Abnormal Spoilage? While normal spoilage is included as a portion of cost of goods sold, abnormal spoilage will be reflected as an expense as it is incurred. 3. Also, it does not lead to an increase in the per-unit price. Waste or Wastage: Waste is that portion of a basic raw material lost in processing, having no recovery value. youtube. Abnormal Loss-Abnormal loss is added to equivalent production after considering the degree of completion specified, it may be assumed abnormal units are 100% complete. , Biyani Group of Colleges is explaining about Treatment of Normal & Abnormal Loss in process costing. Note: Actual Loss: This is the total loss measured after the production process is completed. This excess output is treated similarly to abnormal loss, with its value calculated based on the cost per unit of output. Aug 28, 2019 · Abnormal waste, storage, and selling costs. Any Abnormal loss that occurs in a production is a cost that is to be borne by the business hence, it should be taken into account carefully and needs to be recorded fairly. C. Overhead Method: under this method, cost of abnormal idle time is considered as a part of the works overhead. Accounting for waste allows businesses to get an accurate idea of costs, which then influences pricing. . All are normal spoilage. Elements 8. A visible waste is that which is physically present, and which Abnormal Gain - Valuation and Accounting Treatment Process Account - Abnormal Gain - Illustration Closing Stock in Process Account - Raw Material, Finished Goods, Work in Progress Abnormal Spoilage. Objects 7. , is not added to the cost of production but is transferred to costing profit and loss account. Characteristics or Features of Process Costing 3. The notes and questions for Treatment of Normal and Abnormal Loss of Materials have been prepared according to the B Com exam syllabus. There are also two methods of treating the abnormal idle time. Paragraphs in bold italic type indicate the main principles. The correct answer is A. It provides guidance for determining the cost of inventories and for subsequently recognising an In this lecture Dr. Prof. Abnormal Wastage: The cost of abnormal loss is transferred to Costing Profit and loss account. Normal Waste: This is unavoidable and uncontrollable and treated as part of the product cost. (e) Wastage and other losses: While handling and processing of materials, some wastage and loss arise. Abnormal gain taken as 100% complete in respect of all elements of cost. 4,500. Abnormal spoilage can occur as a result of broken machinery or inefficient operations, and it is thought to be at least partially avoidable. Define Normal Wastage, Abnormal Wastage and Abnormal Effectives and explain the effect of each of them on the ascertainment of cost of an article. Format of Abnormal Loss Abnormal waste is undesirable waste exceeding the normal loss set aside. The balance in the process account will indicate the cost of good units produced by the process concerned. Abnormal Losses: International Accounting Standard 2 Inventories. Abnormal wastage of material arising due to abnormal reasons, i. The cost of abnormal loss is charged to a separate account called Costing Profit and Loss Account. This is necessary to avoid any fluctuation in cost of production. The cost of normal losses is spread over the units produced, increasing the cost per unit. Normal and Abnormal Wastage 5. Watch full vide Apr 12, 2024 · These overheads may include indirect materials or labour (IAS 2. Accounting Treatment: Cost of wastage is the cost of input that has been lost + disposal cost. Control of Waste: In order to control waste in manufacturing industries, a waste The material requirements of production are issued on the basis of material requisitions. A primary issue in accounting for inventories is the amount of cost to be recognised as an asset and carried forward until the related revenues are recognised. The abnormal loss amount cannot be predicted and is thus not added to the company's manufacturing costs. The journal entries under this method are as follows: 1. Jun 16, 2024 · Understanding Spoilage in Food Manufacturing Spoilage in food manufacturing can significantly impact the business’s efficiency and financial stability. Divergent views exist among accountants as to the Abnormal wastage is a wastage which does not occur in the natural course and is usefully in excess of the normal process wastage or loss. Wastage and scrap receive similar accounting treatment. at the time of estimation. Calculation of Cost of Abnormal Loss. e. Meaning of Waste: Waste is a material loss during production or storage due to evaporation, chemical reaction, unrecoverable residue, shrinkage etc. Closing the Abnormal Gain account The balance in the Abnormal Gain a/c after absorbing the set off loss of notional normal loss units represents the actual gain made. Contents: Meaning and Definition of Process Costing Characteristics or Features of Feb 17, 2024 · Material losses are categorized as normal (inevitable) or abnormal (avoidable). prescribe the accounting treatment for inventories. Unlike normal spoilage, which is anticipated and accounted for in production costs, abnormal spoilage is considered an inefficiency that could be avoided under optimal operating conditions. They occur due to factors such as evaporation, shrinkage, or wastage. Sometimes, the actual wastage or loss in a process may be less than the normal wastage or normal loss. The abnormal loss formula in process costing and the following accounting treatment differs from the normal process. Scope IAS 2 applies to all inventories held for sale in the course of a company’s bu-siness, except for: In this article we will discuss about:- 1. Jul 9, 2023 · Under second method, the abnormal loss is dealt through a special account known as “abnormal loss account”. It may be caused by low-quality raw materials, poorly-trained employees, or perhaps machinery that has not been properly Dec 20, 2021 · Dear Students, To follow all the lectures of “Cost Accounting” subject, please follow the given link:https://www. Abnormal loss This is when a loss occurs over and above the normal expected loss. The value of an abnormal gain is calculated in the same manner as that of an abnormal loss and is credited to Abnormal Gains Account. Apr 29, 2024 · Abnormal effectiveness, or abnormal gain, occurs when actual output exceeds expected normal output due to higher efficiency or overestimation of normal loss. The accounting treatment for normal losses involves allocating the cost of these losses to the units produced. In other words, abnormal spoilage is the amount that is over and above the normal amount that is expected in a production process. Following are the main forms of process accounts: 1. This Standard should be applied in accounting for all inventories except the following : (a) work in progress in the construction business, including directly related service contracts (b) work in progress of service business (consulting, banking etc) (c) shares, debentures and other financial instruments held as stock in trade (d) Inventories like livestock Dec 28, 2023 · The treatment and valuation of abnormal loss in accounting play a critical role in maintaining the accuracy of financial records and reflecting the economic reality of a business's operations. Sale proceeds of the scrap can be deducted from material cost or factory Overheads. Such costs are allocated to each unit of production based on the actual use of production facilities (IAS 2. Abnormal spoilage can be ADVERTISEMENTS: In this article we will discuss about Normal Loss, Abnormal Loss and Abnormal Gain (With Accounting Treatment). The value of abnormal gain is shown on the debit side of the process account and the credit side of the Abnormal Abnormal spoilage refers to waste or loss in the manufacturing process that exceeds the expected or acceptable level. C is Treatment in Cost Accounts: The cost of an abnormal process loss unit is equal to the cost of a good unit. It is relatively easy to apply (This Indian Accounting Standard includes paragraphs set in bold type and plain type, which have equal authority. Oil Refinery Process 7. SCOPE IAS 2 applies to all inventories Accounting Entries in books of Consignor; Accounting Entries in books of Consignee; 2] Abnormal Loss. is such a case, the good units produced in excess of normal effectives (or normal output), are treated as abnormal effectives or abnormal gain. Accounting and control of wastage in terms of material cost is important for several reasons. Abnormal wastage = Actual Wastage- Normal Wastage Page 3 Loss which is controllable and avoidable and which is in excess of normal limits is called Valuation of Inventories. Accumulation of Costs 10. Price Variance Total price variance is present as a balance in the Material Price Variance a/c. Many factors, like shrinkage, seepage, evaporation, weight loss, and the use of inefficient equipment, cause the loss or spoilage of units in processing departments. The output is obtained along with wastage, scrap, spoilages and defectives. When abnormal loss occurs, its entire value is transferred to abnormal loss account. The wastage cost is borne by the good units. Based on the nature of material and process, these are classified as normal and abnormal for efficient utilisation and control. The meaning of abnormal loss is any accidental loss to the consigned goods or loss caused by carelessness. In particular, it provides guidance on the determination of costs to be included within inventories, pending recognition of the subsequent revenues. com/watch?v=ESqO8sFgQa0&list=PLLhSIF You have had an abnormal loss if it exceeds the predicted loss. It is in the form of evaporation, deterioration etc. Normal losses, such as evaporation or handling wastage, are absorbed into material costs, while abnormal losses from mishandling, theft, or accidents are charged to the Costing Profit and Loss Account. Calculating abnormal loss involves determining unexpected and avoidable losses during production or processing. This calculation The realizable value associated with the waste is deducted out of the cost of process to get the cost of output. Objective. Distinguishing between normal and abnormal spoilage helps companies manage and mitigate these losses effectively. It is also loss of business. Joint Product 9. The abnormal loss formula you'll need to do is as follows: Normal production cost divided by total output minus normal loss units x abnormal loss units Equals abnorma l loss. In turn, the cost of production per unit just computed should be multiplied by the lost abnormal units. Features of Process Costing 3. Abnormal Wastage and Abnormal Effectiveness 6. Suitability of Method 5. If normal wastage is taken to be 10 per cent, then 90 units ought to have been produced and the cost per unit would have been 50 (Rs. Scrap 3. For normal waste arising from breakage, evaporation, deterioration, shrinkage in production, the total cost incurred is distributed over the good output. Abnormal loss cannot be predicted earlier. With reference to Scenario 1, calculate how many kilograms of good production were produced. Spoilage. IAS 2 prescribes the accounting treatment for inventories. Dec 22, 2024 · Normal Spoilage vs. The Numbers Behind the Waste: Accounting for Spoilage How Spoilage Impacts the Cost of Goods Sold The objective of this Standard is to prescribe the accounting treatment for in-ventories. Jan 8, 2024 · Determining the root cause of abnormal loss is challenging and may require skilled investigation. The abnormal wastage account is then debited, and the relevant process account is credited with the amount and the quantity of abnormal wastage. However, suppose a certain inventory is supposed to be stored at a certain temperature, but this temperature level is not maintained due to power failure. 4 The statement is true. If you use bad quality raw material in the production, there is big risk of wastage in production. The formula for calculating abnormal loss is as follows: Page 2 Loss which is controllable and avoidable and which is in excess of normal limits is called abnormal loss. It happens due to doing the production work by unskilled person. Mar 3, 2024 · This page explains the treatment of normal loss in a process costing system. Firstly, it helps in identifying the areas of wastage and taking corrective actions to minimize it, thereby reducing material costs. cagojry uqjf fwom hflidm dvvhkbw lgoeguw tqh ssviame cfvz gflf