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