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Hello i am going through process costing chapter and I am trying to understand the logic behind this, it makes sense to me when losses have a scrap value but why would a company expect scrap value on abnormal gains when they are full units?
There obviously is no scrap value!
However, since the scrap value on the expected/normal losses is taken into account in the calculation of the cost per unit, if there are abnormal gains then although obviously they get more units at the same time they get less scrap proceeds than they were expecting.
I explain this in the lectures, and I do hope that you are not trying to study from the notes without watching the lectures because that would be a complete waste of time. The notes are not a study text – they are lecture notes – and it is in the free lectures that I work through the examples and explain and expand on the notes.
If you are not watching the free lectures for any reason then you need to buy a Study Text from one of the ACCA Approved Publishers and study from there instead 🙂
Thank you for clarifying John, i always watch your lecture notes/videos and they have been very helpful but some parts i just get hard stuck.
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