Both normal and abnormal losses may occur in a job order system and they are accounted for in the fol¬ lowing manner

• normal losses that are generally anticipated on all jobs are estimated and included in the devel¬ opment of the predetennined overhead rate.

• normal losses that are associated with a particu¬ lar job are charged to that job (net of any dis¬ posal value of the spoiled items).

• abnormal losses are always charged to a loss ac¬ count in the period they are incurred.

LO.1