Cost Accounting
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This document outlines how to account for normal and abnormal losses at different stages of production. For normal losses at the start, exclude from equivalent units for the first department and adjust the last department's unit cost for subsequent departments. For normal losses at the end, include in equivalent units at a percent of completion and charge only finished goods for the first department, and adjust the last department's unit cost and transfer to finished goods for subsequent departments. For abnormal losses, include in equivalent units and charge to factory overhead at a percent of completion for both the first and subsequent departments, adjusting the last department's unit cost for subsequent departments.
Cost Accounting
- 1. If normal loss (start of process) b) for 1st dept-----just exclude from equivalent units. c) For subsequent deprt------------- i). excluded from equivalent units. ii). Adjust unit cost of last dept. If normal loss (ending process) a). for 1st dept----------- i). included in equivalent units percent of completion. ii). Cost as percent of completion charged only to finished goods not in W.I.P(end) b). for subsequent dept----------- i). included in equivalent units percent of completion. ii). Adjust unit cost of last deptrment. iii). Transferred percent of completion to FG only not in WIP. If abnormal loss 1st dept------- i). included in equivalent units. ii). Charged to FOH percent of completion. Subsequent deptr----------- i). included in equivalent units percent of completion..see chapter 6.exercise 6 & 7 of matz. ii). Adjust unit cost of last deptment. iii). Charged to FOH on % of completion.