Process Costing

jewels.p

I am trying to do a Process Account. How do I calculate the amount in £'s for the Normal Loss?

Figures are Normal Loss 5%
Materials £68,000 (18,000kg)
Output 16,500kg

I have the Normal Loss as 900 kg which I believe is correct but cant get the amount in £.s right. Think I am starting to get confused now!

Struggling with this section!

crispy

Hello,

I would think that unless the question tells you otherwise (eg. Normal Loss can be sold for £x) then the Normal Loss value will be NIL.

jewels.p

crispy wrote: »

Hello,

I would think that unless the question tells you otherwise (eg. Normal Loss can be sold for £x) then the Normal Loss value will be NIL.

Yeah discovered that after I posted this thread! Feel a bit silly now. Think my mind is numb trying to do all these abnormal and normal process accounts. Thanks anyway Crispy!

Jewels

A-Vic

jewels.p wrote: »

Yeah discovered that after I posted this thread! Feel a bit silly now. Think my mind is numb trying to do all these abnormal and normal process accounts. Thanks anyway Crispy!

Jewels

Dont feel bad jewels that is a really hard bit of the exam also make sure you separate normal loss from abnormal loss

jewels.p

A-Vic wrote: »

Dont feel bad jewels that is a really hard bit of the exam also make sure you separate normal loss from abnormal loss

Not sure what you mean A-Vic when you say make sure I separate normal loss from abnormal loss?

A-Vic

jewels.p wrote: »

Not sure what you mean A-Vic when you say make sure I separate normal loss from abnormal loss?

Abnornal loss is when you go over your expected loss and you take the difference and scrap it i hated these questions.

Say for intance you start with 600kg and you have a normal loss of 5% but your actual loss is 7% so then your abnormal loss would be 2%

that 2% will also have whats called a scrap value so you account for this.

i think thats right

so say of 600kg @ 5% is 30 kg

actual loss is 7% = 42 kg

so abnormal loss would be 12 kg so say scrap value is £1 per kilo it would be £12

jewels.p

A-Vic wrote: »

Abnornal loss is when you go over your expected loss and you take the difference and scrap it i hated these questions.

Say for intance you start with 600kg and you have a normal loss of 5% but your actual loss is 7% so then your abnormal loss would be 2%

that 2% will also have whats called a scrap value so you account for this.

i think thats right

Yes it's so confusing. I was enjoying this Unit till I started on this. Read the same Chapter in my Osbourne Book about four times now and it is still not completely clear. Hopefully if I keep practising it will click eventually! Is this a big part in the Exam?

crispy

Hi,

A-Vic is correct, any Abnormal Loss will have to be costed.

In your orginal question there is an abnormal loss of 600kg

ie:
Output = 16,500kg
Normal Loss = 900kg
Abnormal Loss = 600kg

Total = 18,000kg

Andypandy

I think you normally get a process account question in the exam, but if I remeber correctly, June's didn't have an abnormal loss in it. Try some of the past exam questions for practice. Good luck.

A-Vic

Andypandy wrote: »

I think you normally get a process account question in the exam, but if I remeber correctly, June's didn't have an abnormal loss in it. Try some of the past exam questions for practice. Good luck.

it was in the december one tho because i totally messed it up then as soon as i came out i knew the answer tut at me lol

PGM

A-Vic wrote: »

so abnormal loss would be 12 kg so say scrap value is £1 per kilo it would be £12

Would abnormal loss not be the cost of that 12kg less the £12 scrap value?

A-Vic

PGM wrote: »

Would abnormal loss not be the cost of that 12kg less the £12 scrap value?

yes in the process account you credit it

PGM

A-Vic wrote: »

yes in the process account you credit it

Ah right, been a while since I did those.