Costing principles are the fundamental guidelines that direct how costs are recorded and reported in management accounting, ensuring that financial data is accurate and useful for decision making.
Normal loss refers to the predictable and usual loss of materials in a manufacturing or chemical process due to factors like waste, seepage, shrinkage, or spoilage. These losses are considered a standard part of the production process and are accounted for in manufacturing costs.
Process costing is a method of costing used primarily in manufacturing where goods or services result from a sequence of continuous or repetitive operations.
Waste (also referred to as spoilage) is the amount of material lost as part of a production process. Acceptable levels of waste, known as normal loss, are part of the cost of production and are allowed for in the product costs. Any process or activity that does not add value is also considered waste.
