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Hi John , I hope you are well. Opentuition notes , point (B) – overhead expenses which sould be excluded include selling costs, storage cost, administrative cost along with ABNORMAL wastage.
I wanted to know if any question asks about normal wastage should be included or excluded , what should be my answer. Will the normal wastage will included in cost ?Normal wastage will be taken into account when valuing the production – it is not recorded as being a separate cost.
Also, I wanted to ask about damaged inventroy.
I know you said in lecture, that damaged inventory needs to valued seperately with Net realisable value if its less than cost.but i wanted to ask, Will the difference between the cost of inventory and net realisable value will be booked as loss. if yes, will it booked when the inventory damages or at end of the period also, what would be the entry of that damaged inventory.
like, If cost is 10 usd and net realisable value of 1 damaged inventory is 6 (same as in lecture)
will the entry be – DR. SOPL $4 , CR INVENTORY $4 ( AS LOSS INCURRED)
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