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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › process costing
Hi Sir, please help me to answer the question below
a process has a normal loss of 5% of input
all losses have a realisable value of $22 per litre
last month 20000 litres were input into the process and the good output was 19500 litres
process costs for the month were $820,000
what was the entry in the process account for the normal loss last month?
The correct answer was $22,000 (credit) and i don’t understand why.
Have you watched our free lectures on process costing?
The normal loss is 5% x 20,000 = 1,000. The sale value is $22.
So we credit with 1,000 x $22 = $22,000
So why credit and not debit?
Again – have you watched the lectures??
The money from selling losses reduced the net cost of the units that are produced.