Following information is available of PQR for year ended March, 20XX: 4,000 units in process, 3,800 units output, 10% of input is normal wastage, Rs 2.50 per unit is scrap value and Rs 46,000 incurred towards total process cost then amount on account of abnormal gain to be transferred to Costing P&L will be:-

The correct answer is A. Rs 2,500.

Explanation:

The abnormal gain is calculated as follows:

Abnormal gain = (Normal wastage + Scrap value) – Total process cost

= (0.1 * 4,000) + (3,800 * 2.50) – 46,000

= 2,500

Therefore, the amount on account of abnormal gain to be transferred to Costing P&L is Rs 2,500.

Each option is explained below:

• Option A: Rs 2,500 is the correct answer.
• Option B: Rs 2,000 is incorrect because it is the amount of normal wastage.
• Option C: Rs 4,000 is incorrect because it is the total process cost.
• Option D: Rs 3,500 is incorrect because it is the sum of normal wastage and scrap value.