Process costing help??!!!

This topic contains 4 replies, has 2 voices, and was last updated by Avatar of Vipin Vipin 2 years, 9 months ago. This post has been viewed 114 times

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  • Avatar of mayfikry
    mayfikry
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    Hello,

    Can someone solve for me this question :-

    From the following information, prepare:
    a)the process account
    b)the abnormal loss or gain account.

    Process:Input 6,000 units
    Normal loss:5% of input
    Direct materials:$21,600
    Direct labour:8,000
    Production overhead:$16,000
    Actual output:5,500 units
    Loss has scrap value per unit of $3.80.

    You help would be appreciated.
    Thanks in advance :)


    Avatar of Vipin
    Vipin
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    this is easy question, pls try to learn it by yourself from study texts…


    Avatar of Vipin
    Vipin
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    Now, i am in a good mood to explain….

    to create process account.
    you need to identify which entries are debited and credited…

    input costs, labour cost, production overhead costs are debited in process acc.

    output cost, normal loss are credited…

    abnormal gain is debited and abnormal loss is credited…

    to find the cost of ouptut, you need to do some calculations…..

    before making abnormal loss or gain account.. you need to make scrap account. so, after making process acc, make scrap account and then abnormal loss / gain account.

    if you still have doubts on any steps , pls ask again…


    Avatar of mayfikry
    mayfikry
    Participant
    • Topics: 18
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    Umm, thanks for your reply. But i needed someone to actually solve it, i already do know how to do it. But my answer and the book’s answer are different.
    So i was hoping to get a third opinion. :)

    @vipin70 said:
    Now, i am in a good mood to explain….

    to create process account.
    you need to identify which entries are debited and credited…

    input costs, labour cost, production overhead costs are debited in process acc.

    output cost, normal loss are credited…

    abnormal gain is debited and abnormal loss is credited…

    to find the cost of ouptut, you need to do some calculations…..

    before making abnormal loss or gain account.. you need to make scrap account. so, after making process acc, make scrap account and then abnormal loss / gain account.

    if you still have doubts on any steps , pls ask again…


    Avatar of Vipin
    Vipin
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    • Topics: 96
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    total cost =21600+8000+16000=45600
    scrap value of normal loss=6000*.05*3.8=1140
    net cost=45600-1140=44460
    expected output=6000*.95=5700
    cost per unit=44460/5700=7.8
    cost of actual output=5500*7.8=42900
    cost of abnormal loss=200*7.8=1560

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