Process Account

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
Can anyone help me in how to remember how to work out the cost per unit in the process account for all the different variations - abnormal loss with scrap, abnormal gain with no scrap value, etc?!

Is anyone else finding this difficult?

The exams in December.

I am really struggling!

Thankyou.

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Process Account

    Find cost per unit using this division sum:-

    Total input costs less scrap value of normal loss
    expected output
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Process Account

    It doesn't matter whether there are abnormal gains or abnormal losses the cost per unit is calculasted in the same way.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Background data

    Product 10119574

    The factory has put 1000 litres of material into the process costing £12,000
    Other inputs are labour and overhead costing £8,000

    Output was expected to be 800 litres as the normal loss of 20% of input materials is expected .
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Example 1

    Output was 750 litres and all scrap can be sold at £4.00 per litre.

    So the sum looks like
    £ 20,000 total input cost - £1,000 scrap value of normal loss
    Expected output of 800 units

    Cost per unit = £23.75
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Example 2

    Output was 850 units (scrap has no value)

    Cost per unit is the same sum

    Total input cost £20,000 - £0 scrap value of normal loss
    800 units of expected output

    = £25.00

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Process Account

    I have produced T accounts for both the examples here
    If you email me
    sandy.hood@chichester.ac.uk
    and make your subject
    Process Costing Discussion examples

    my out of office will automatically send you the T accounts and a copy of the thread

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