Calculate Normal Loss and Abnormal Loss

• Input units = 700 units
• Normal loss rate = 5% of inputs
• Normal loss units = $700 \text{ units} \times 0.05 = 35 \text{ units}$
• Actual loss units = 40 units

Since Actual loss (40 units) > Normal loss (35 units), there is an Abnormal Loss.

• Abnormal Loss units = Actual loss - Normal loss = $40 - 35 = 5 \text{ units}$