BEHIND THE NUMBERS
How this calculation works
Normal loss = input × normal %. Expected good output = input − normal loss. Unit process cost = (total process cost − normal loss × scrap value) ÷ expected output. Difference = expected output − actual good output. Positive difference is abnormal loss; negative is abnormal gain. Net loss or gain = absolute difference × (unit process cost − scrap value).
Worked example
Expected output is 900 units. After £100 normal scrap, £9,900 divided by 900 gives £11 per unit. The 50-unit abnormal loss costs £550 less £50 scrap, leaving a £500 net loss.
Example result: £500.00
Normal loss changes unit cost
Expected loss is absorbed by expected good production after allowing for normal scrap proceeds. Dividing by actual output would hide the distinction between normal and abnormal performance.
A gain also changes scrap proceeds
When fewer units are lost than expected, extra good output is an abnormal gain. Its net value allows for scrap proceeds that are no longer earned.
Assumptions and rounding
- All losses have the same scrap value and are identified at the end of the process.
- No opening or closing work in progress; homogeneous output.
Questions about this calculator
Can the result be an abnormal gain?
Yes. Good output above the expected amount produces a gain, with the forgone scrap value deducted.
Can I include unfinished production?
No. Select the work-in-progress option and the tool will explain why this model cannot calculate it.