# Process costing help??!!!

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This topic contains 4 replies, has 2 voices, and was last updated by  Vipin 3 years, 6 months ago.

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• mayfikry
Participant

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
Actual output:5,500 units
Loss has scrap value per unit of \$3.80.

You help would be appreciated.

Vipin
Participant

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

Vipin
Participant

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…

mayfikry
Participant

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…

Vipin
Participant

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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