ACCA MA · Chapter 8 · Question 6 of 12
A process takes in 5,000 units costing $27,000 in total. Normal loss is 10% of input and has no scrap value. Actual output was 4,600 units. What is the value of the abnormal gain, and where is it entered in the process account?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) $600, debited in the process account
Explanation
Expected output = 5,000 x 90% = 4,500 units, so the abnormal gain = 4,600 - 4,500 = 100 units. Cost per expected unit = 27,000 / 4,500 = $6, so the gain is valued at 100 x 6 = $600. An abnormal gain is debited in the process account (with the matching credit in the abnormal gain account), because more output has come out than expected.
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