ACCA MA Syllabus C. Cost Accounting Techniques - Process accounts - Notes ^{8 / 17}

The following steps should be followed when answering questions

1. Draw the process account, and enter the inputs, i.e. units and values.

2. Enter the normal loss – units and scrap value if any.

3. Enter the good output – units only.

4. Balance the units. The balancing figure is either abnormal loss or gain.

5. Calculate the average cost per unit
 
    

                                          Total cost of inputs – Scrap value of normal loss

   Average cost per unit = ---------------------------------------------------------
                                     
                                            Units input – Normal loss

6. Value the good output and abnormal loss or gain at this average cost per unit.

If no scrap value is given, no scrap account can be drawn up and value of normal loss in process account will be nil.