KI. Processing Limited has identified that an abnormal gain of 160 liters occurred in its refining process last week. Normal losses are expected and have a scrape value of £2.00 per litre. All losses are 100% complete as to material cost and 75% complete as to conversion costs. The company uses the weighted average method of valuation and last week’s output was valued using the following costs per equivalent unit:

Materials

£9.40

Conversion costs

£11.20

The effect on the profit and loss account of last week’s abnormal gain is

A Debit £2528

B Debit £2828

C Credit £2528

D Credit £3168