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# Process Costing

jewels.p
Font Of All KnowledgeRegistered Posts:

**1,774**
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!

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!

0

## Comments

456I 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.

1,774Yeah 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

6,970Dont feel bad jewels that is a really hard bit of the exam also make sure you separate normal loss from abnormal loss

1,774Not sure what you mean A-Vic when you say make sure I separate normal loss from abnormal loss?

6,970Abnornal 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

1,774Yes 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?

456A-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

5266,970it 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

1,954Would abnormal loss not be the cost of that 12kg less the £12 scrap value?

6,970yes in the process account you credit it

1,954Ah right, been a while since I did those.