A. Not recorded separately; its cost is absorbed by good units
B. Valued at scrap value, and cost per unit is adjusted
C. Valued at cost per unit and debited to Profit & Loss Account
D. Shown as an asset
Answer: Option B
Solution (By JKSSB Mock Tests)
Normal loss is expected; its scrap value, if any, reduces the cost of good units. The loss quantity is deducted, and cost per unit is computed on input minus normal loss.
Assertion (A): Wages paid for erection of a new plant are debited to Plant and Machinery account. Reason (R): All expenses incurred to bring an asset to its working condition are capitalised. Choose the correct option:
A.A is false but R is true.
B.A is true but R is false.
C.Both A and R are true and R is the correct explanation of A.
D.Both A and R are true but R is not the correct explanation of A.
Explanation:
Material Yield Variance measures the difference between the actual output and the standard output expected from the actual input. It is calculated as (Standard Yield - Actual Yield) x Standard Cost per unit of Yield. A positive value indicates a favorable variance.
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