A company using process costing manufactures a single product which passes through two processes, the output of process 1 becoming the input to process 2. Normal losses and abnormal losses are defective units having a scrap value and cash is received at the end of the period for all such units.
The following information relates to the four-week period of accounting period number 7. Raw material issued to process 1 was 3000 units at a cost of £5 per unit.
There was no opening or closing work in progress but opening and closing stocks of finished goods were £20 000 and £23 000 respectively.

You are required to present the accounts for
Process 1
Process 2
Finished goods
Normal loss
Abnormal loss
Abnormal gain
Profit and loss (so far as it relates to any of the accounts listed above).

Process 1 Process 2 Normal loss as a percentage of input Output in units Scrap value per unit Additional components Direct wages incurred Direct expenses incurred Production overhead as a percentage 10% 2800 2 5% 2600 5 E1000 780 4000 6000 10000 14000 of direct wages 7 5% 125%