Question

Where process scrap is re-cycled for use in conjunction with new material as well as being sold externally, which of the following is most likely, to be the value at which it is debited to the process?

• A. At the same price as it is sold externally
• B. At the cost of normal losses
• C. At the cost attached to abnormal losses
• D. Nil value

Answer 1

The correct option is A At the same price as it is sold externally

During the process, a certain percentage of material gets wasted. This is called as normal loss. These units can be sold as scrap in the open market or re cycled with new material. In such situation market price of such scrap should be debited to process account.