Process costing

If there had been no abnormal gain, output would have been 12000 - 500= 11500. This is the expected output. The relationship between input, normal output and normal loss is: Input 100 - Normal loss 10 = Expected output 90 Using proportions: So for normal production Input = Expected output x 100/90 Here, Input = 11,500 x 100/90 = 12778.

When do we use the formula to find cost/unit in a process costing, = (Input cost - Scrap value / Expected output ) and when did we use the method, Apportioning common cost based on physical basis, market value, NRV I did a question, and it states: "Process costs are apportioned to joint products on the basis volume of output" but the final answer provided in a process account shows that the cost/unit figure is derived from the first formula

There are two things going on here - process costing, and accounting for joint and by-products. Process costing: the cost per unit is calculated as though everything goes to plan. If input is 100kg at $10/kg and 20% is the normal loss with the lost material selling for $2/kg, then the cost per unit is: (100 x 10 - 20 x 2)/80 = $12 If there are only 79 units made (an abnormal loss of 1 unit) the cost of that abnormal loss like taking a good unit down from the shelf and scrapping it for $2, so the cost is £12 - $2 - 10. Joint cost/by products. This is where there is a common process to start with then the initial product (precursor) splits into, say, two in a subsequent process. You need to know how to split the initial, joint costs and feed them into the two resulting products. So, continuing my example, if 80kg were made as expected at $12 each the total cost of 12 x 80 = 960 has to be split ie apportioned between the two resulting products. You were told in your question do to the split according to the output volumes of the two final products.

I understand now. Thank you!

You're welcome.