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  1. avatar says

    Hup! my solution on the T account form is jumped up. Ok let me put it in a table form

    Material 3000 9000
    concertion 11970
    =
    total 20970
    Add Abnormal gain 200 ?…………………1415………….=20970-450=20520 x (200/2900)=1415
    Total Debit amount 22385
    less abnormal loss 300 @ 1.50 450
    Bal at Cr side (Output Value) 2900 7.56 21935

    • Avatar of johnmoffat says

      No – your answer is wrong.

      We always cost out based on what we would expect to produce (the input less the normal loss), and treating the expected proceeds from the normal loss as a ‘negative’ cost.

      The output and any abnormal gain or loss are both valued at the full cost per unit.

      The only correct answer is the one in the Course Notes.

      (and for this question, producing a t-account in your workings is wasting time – the question only wants the value of the output and so in the exam do not waste any time at all calculating anything else :-) )

  2. avatar says

    I adapted a different approach to ascertain the output cost which results a little bit slightly from your approach. can you confirm the correctness of this approach>

    using Q6.
    Procees a/c
    mat 3000 9000 Normal loss(scrap) 300 @ 1.50 450
    Convertion cost 11970 Output (w3) 2900 = 21935.17
    total 20970
    Abnormal gain (w2) 200 @ 7.08 1415.17
    Total 3200 22385.17 total 22385.17

    working 1. Therefore Actual cost=20970-450=20520
    working 2. Hence Abnormal gain=(200/2900)*20520=1415.17
    working 3. therefore Output= 22385.17-450

  3. avatar says

    To Martinras
    Abnormal loss/Gain is always accounted for full production cost(in this case 7.6)in the process account. the scrap is dealt with in another account called LOSS account and in that account the difference goes into the Income statement either as profit or loss depending on which side the balance is.

  4. avatar says

    In the last test if I proceed I get an abn. gain of 200*7,6=1.520, less cost (scrap) of 200*1,5=300$ = a total of 1.220$

    When I make the Process account, why do I then Debet the 1.520$ and not the 1.220$?

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