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Question 8a14 and 8a17 from BPP
At 8a14 : we value abnormal gain at full cost of production ( 164 x 5.5$ )
But why don’t we do the same workings at 8a17 ?
(16.36$ – $5 ) x 400
Why do they minus 5$ of scrap value from full cost of production .Thanks Mr .John
In 8a14 they are using the process account to find the missing figure (the value of the input), and in the process account we always put the abnormal loss at full cost of production.
In 8a17 they are asking for the amount to the statement of profit or loss in respect of the abnormal gain, and the gain in the profit and loss is the fill cost of the abnormal gain less the scrap proceeds that they are not receiving.
I explain all of this in my free lectures on process costing.
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