COST ACCOUNTING
PROCESS COSTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Input less Abnormal Loss
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Input less Normal Loss
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Input less Abnormal Gain
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Input add Abnormal Loss
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Detailed explanation-1: -Normal Output = Units introduced – Units of normal loss Normal Cost of Normal Output = Total Cost – Scrap value of Normal Loss. and if there is any scrap value then that will be shown in amount column of the credit side corresponding to lost units.
Detailed explanation-2: -Normal loss is the loss that is expected in a process and is often expressed as a percentage of the materials input to the process. If normal loss does not have a scrap value, it is valued in the process account as $Nil. If normal loss is sold as scrap, the revenue is used to reduce the input costs of the process.
Detailed explanation-3: -A loss which occurs normally during the process of production is called as normal loss. When actual loss is less than the estimated loss it is considered as abnormal gain.
Detailed explanation-4: -If actual output is less than expected output an abnormal. loss occurs. If actual output exceeds expected output an abnormal gain occurs. • Rule 3: normal loss is not allocated a share of process costs in the process.