Abnormal loss account and abnormal gain account, Cost Accounting

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A product is manufactured by passing through three processes: A, B and C. In process C a by-product is also produced which is then transferred to process D where it is completed. For the first week in October, actual data included:

 

Process

A

Process

B

Process

C

Process

D

Normal loss of input (%)

5

10

5

10

Scrap value ($ per unit)

1.50

2.00

4.00

2.00

Estimated sales value of by-product ($ per unit)

-

-

8.00

-

Output (units)

5,760

5,100

4,370

-

Output of by-product (units)

-

-

510

450

 

 

 

 

 

 

$

$

$

$

Direct materials (6,000 units)

12,000

 

 

 

Direct materials added in process

5,000

9,000

4,000

220

Direct wages

4,000

6,000

2,000

200

Direct expenses

800

1,680

2,260

151

You are required to prepare:

(a)   Accounts for process A, B, C and D

(b)   Abnormal loss account and abnormal gain account

Note: Assume that overheads are to be absorbed using the direct wages percentage method.


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