Brewdog plc brews lager and costs the process using process costing. Hops (measured in kg) are added at the start of the process. During the process, the hops are treated with fermenting chemicals and labour costs are incurred.

At the start of August, opening work in progress (WIP) consisted of 800kg of partially brewed lager, which was 100% complete for materials but only 40% complete for fermenting chemicals and labour. It had cost £7,678 (materials £5,200; chemical and labour £2,478) to get the opening WIP to its current state.

A further 8,000kg of hops (costing £96,000) were added to the process at the beginning of August. During the process, fermenting chemicals costing £31,455 were added and labour costs of £41,895 were incurred.

At the end of August, closing WIP consisted of 1,000kg of partially brewed lager, which was 100% complete for materials, but only 60% complete for fermenting chemicals and labour.

There were no normal or abnormal gains or losses during August.

Requirements:

Prepare the process account for August assuming that Brewdog plc uses the first in first out (FIFO) method to value work in progress weighted average method to value work in progress.
Explain how the treatment of normal and abnormal losses differs within a process costing system, giving examples of how each type of loss may occur.