f) ‘Process costing is a term used in cost accounting to describe one method for collecting and assigning manufacturing costs to the units produced.’ There are some statements about the process costing:An abnormal loss occurs when expected output exceeds actual output.The scrap value of an abnormal loss is credited to the process account.The allocated cost of an abnormal gain is credited to the process account.The inputs to a process less the normal loss is the expected output.The normal loss in a process is allocated a cost in order to reconcile the costs of inputs and outputs.The FIFO method assumes opening WIP is the first group of units to be completed. Therefore, opening WIP is charged separately to completed production and CPU is based on current period costs. Required: Please identify which of the above statements are false and explain the reasons.

The scrap value of an abnormal loss is credited to the process account is false. The scrap value of…

Answered: Required: Please identify which of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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f) ‘Process costing is a term used in cost accounting to describe one method for collecting and assigning manufacturing costs to the units produced.’ There are some statements about the process costing:
An abnormal loss occurs when expected output exceeds actual output.
The scrap value of an abnormal loss is credited to the process account.
The allocated cost of an abnormal gain is credited to the process account.
The inputs to a process less the normal loss is the expected output.
The normal loss in a process is allocated a cost in order to reconcile the costs of inputs and outputs.
The FIFO method assumes opening WIP is the first group of units to be completed. Therefore, opening WIP is charged separately to completed production and CPU is based on current period costs.

Required:

Please identify which of the above statements are false and explain the reasons.

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