Can someone explain why the process account is credited with the full production of the abnormal loss unit. Why credit and not debited?
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John MoffatTutor·
It is credited so that we end up with a balance showing what was actually produced.
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Allison·
Hi, in question 1, how can you tell the difference between abnormal loss or gain? I already watched the lecture but still confused
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John MoffatTutor·
If the output is more than expected then there is an abnormal gain.
If the output is less than expected then there is an abnormal loss.
For process X, the expected output is 65,000 - (8% x 65,000) = 59,800. The actual output was only 58,900 and so there is an unexpected/abnormal loss of the difference.
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ashraf·
helpfull
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Boikano·
the management accounting pdf that i downloaded here is of awesome help, with it i can now tackle any question!
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John MoffatTutor·
Great. Have you watched the free lectures that go with the notes?
If the output is less than expected then there is an abnormal loss.
For process X, the expected output is 65,000 - (8% x 65,000) = 59,800. The actual output was only 58,900 and so there is an unexpected/abnormal loss of the difference.