CaParticular Input Output Normal Abnormal AbnormalLoss Loss gainLtrs Ltrs Ltrs Ltrs Ltrs1 No losses 12,000 12,000 - - -2 Normal loss- no S.V 12,000 10,000 2,000 (1/6) - -3 Abnormal loss - no 12,000 9,000 2,000 (1/6) 1,000 -4 Normal loss - with S 12,000 10,000 2,000 (1/6) - -5 Abnormal loss - with 12,000 9,000 2,000 (1/6) 1,000 -6 Abnormal gain - no 12,000 11,000 2,000 (1/6) - 1,0007 Abnormal gain - wit 12,000 11,000 2,000 (1/6) - 1,000
Required no.1 When No losses in the process
Process Cost AccountUnits Rate Cost UnitsInput 12,000 10 120,000 Output 12,00012,000 120,000 12,000Cost per unit = Cost of input / Nos. of output units (Expected output units)= Rs. 120,000 / 12,000 units= Rs. 10 per unit.
Input cost includes cost of direct material and cost of conversion. In this there isunits, therefore the cost of output is equal to cost of input.
Required no.2: When Normal loss in the process (With NO salvage value)
Process Cost AccountUnits Rate Cost unitsInput 12,000 10 120,000 Output 10,000Normal loss 2,00012,000 120,000 12,000
Cost per unit = Cost of input / Nos. of Expected output units (excluding normal lo
= Rs. 120,000 / 10,000 units= Rs. 12 per unit.The normal loss is inherient in nature, and it occur under efficient operating condition anunavoidable.
Cost is not assigned to nos. of units lost (Normal).The cost of material loss (Normal) is transferred to nos. of expected goods outpuincreases the per unit cost of finished goods.F
or Input: For Output
Work in process Debit Finished goods DebitRaw material Credit Work in processAccured payrol CreditFOH (Applied) Credit
No entry for normal loss because there isnormal loss units.
Required no.3: When Abnormal loss in the process (With NO salvage value)
Process Cost Accountunits Rate Cost unitsInput 12,000 10 120,000 Output 9,000Normal loss 2,000Abnormal Loss 1,00012,000 120,000 12,000
Cost per unit = Cost of input / Nos. of Expected output units (including abnormal
= Rs. 120,000 / 10,000 units= Rs. 12 per unit.Abnormal loss AccountUnits Rate Cost UnitsProcess cost accou 1,000 12 12,000 Profit and loss a/c 1,0001,000 12,000 1,0001 These losses are not an inherent in nature and that is why it is called abnormal or contr 23 It is treated as a periodic cost and written off in the profit statement at the end of accou4 Cost of abnormal loss in not included in cost of ending inventory, if any.
F
or Input For Abnormal Loss:
Same entry
a) Transferred from Process account to Abnormal loss accou
For Output
Abnormal loss account DebitSame entry Process cost account
b) Transferred to Profit and loss account:
It will be excluded from the process account
having a value equal to the value of goo
of 00
Process Costing Examples-muhammadazeem
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