Example of Abnormal Loss
Assume that GFG (P) Ltd. is a company in Noida (U.P.) engaged in the production of milk products like Milk, Cheese, Butter, Buttermilk, Yogurt, etc. While working at full capacity, GFG (P) Ltd. processes 1,00,000 liters of milk daily. As per the calculation of the production department, there is a 5% normal loss due to evaporation and normal wastage. One day, the company observed a machine failure, so the production department replaced the machinery with the latest machinery. However, the workers were not skilled enough to use the New Machinery. The production department recorded a total of 9% loss on that production day. Calculate the Normal Loss and Abnormal Loss and identify the causes of Abnormal Loss.
Solution:
Normal Loss = % = % = 5,000 Liters
Actual Loss Recorded = % = % = 9,000 Liters
Calculation of Abnormal Loss = Actual Loss – Normal Loss = 9,000 Liters – 5,000 Liters
Hence, Abnormal Loss = 4,000 Liters.