"Abnormal costs are not recorded as part of production cost." Justify for or against.

FOR — The statement is correct. Abnormal costs are NOT recorded as part of production cost.

Reasons:

1. Meaning of abnormal costs — Abnormal costs are those costs which arise due to unusual, unexpected or non-recurring circumstances that are not part of the normal production process. Examples include cost of idle time due to a strike or major machine breakdown.

2. Distort cost of production — If abnormal costs are included in production cost, they will distort the true cost of producing the goods and make cost comparison across periods misleading.

3. Treatment — Abnormal costs are charged directly to the Profit and Loss Account as abnormal losses, rather than being included in product cost or cost sheet. This ensures that the cost of production reflects only the normal expected cost of producing units.