The correct answer is: A. Debited with the scrap value of the abnormal loss units
In process costing, an abnormal loss is a loss that is not expected to occur under normal operating conditions. It is usually caused by some unusual event, such as a machine breakdown or a power outage. Abnormal losses are not included in the normal cost of production, and they are not used to calculate the cost per unit of output.
When an abnormal loss occurs, the process account is debited with the scrap value of the abnormal loss units. The scrap value is the amount of money that can be recovered from the sale of the abnormal loss units. The process account is also credited with the cost of the abnormal loss units. This includes the cost of the materials, labor, and overhead that were used to produce the abnormal loss units.
The net effect of debiting the process account with the scrap value of the abnormal loss units and crediting the process account with the cost of the abnormal loss units is to zero out the account. This is done to show that the abnormal loss is not a part of the normal cost of production.
Here is a brief explanation of each option:
- Option A: Debited with the scrap value of the abnormal loss units. This is the correct answer. The scrap value is the amount of money that can be recovered from the sale of the abnormal loss units.
- Option B: Debited with the full production cost of the abnormal loss units. This is incorrect. The full production cost of the abnormal loss units is not included in the normal cost of production.
- Option C: Credited with the scrap value of the abnormal loss units. This is incorrect. The scrap value is not included in the normal cost of production.
- Option D: Credited with the full production cost of the abnormal loss units. This is incorrect. The full production cost of the abnormal loss units is not included in the normal cost of production.