r10 In the illustrations given so for any process loss or wastage has not been considered. But loss during the course of production is generally phenomenal and hence a normal percentage of loss is pre-determined. The actual loss may be more or less than this norm set beforehand. It will result in abnormal loss or abnormal gain. The scrap is sold in the market and it gives some value. The realisable value of normal scrap is generally deducted from the cost materials. Net cost of materials is divided by the equivalent output to arrive at the per unit cost of materials. In case of normal loss, nothing is taken as equivalent production. But if abnormal loss of output is there, it should be valued at full cost of such production which has been completed and hence the equivalent production shall be taken as 100%. Units of abnormal gain would also be taken 100% complete but its value will be deducted out of total cost of equivalent production If the loss of output sustained in course of manufacture is complete as regards materials, labour and overheads in different degrees, the degree of completion must be taken into consideration while calculating equivalent production in respect of abnormal loss. However, normal loss will not be taken as equal to any equivalent units while abnormal gain would always be taken as 100% complete as regards all elements of cost. If material has been received from the previous process, it should be separately recorded. The opening work-in-progress would not require this material again during the current period and hence as regards this material, there will be no equivalent units of opening work-in-progress. The units which have been introduced and completed during the period would be 100% complete s regards the material transferred from previous process. Normal loss has no equivalent units. Abnormal loss and closing work-in-progress are 100% complete as regards this material , the abnormal gain too is obviously 100% complete. The value of normal scrap may be deducted out of the material cost brought forward from the preceding process only instead of prorating it to this material and material added during the process for the sake of convenience. Material from previous process may be termed as Material: (1) and that added during the process as Material, (2) for computation purposes here. The following illustrations explain clearly the procedure adopted in different circumstances Illustration 12: With the help of the following information, prepare Process Account, giving full working notes: Opening stock of work-in-progress: 1,000 units at Rs. 10,000 Degree of Completion : Materials 100%, Labour 50%, Overheads 40% Introduced during the process: 10,000 Units at Rs. 37.800 Wages: Rs. 17,840 Overheads: Rs. 8,840 Scrap 1.500 Units Degree of Completion: Materials 100%. Labour 80%, Overhead 50%. Closing Work-in-progress: 1,000 Units Degree of Completion : Material 100%, Labour 60%, Overheads 50%. Normal loss 10% of total input. Scrap value Rs. 2 per unit