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Normal Loss

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Normal Loss

  • This topic has 4 replies, 2 voices, and was last updated 10 years ago by John Moffat.
Viewing 5 posts - 1 through 5 (of 5 total)
  • Author
    Posts
  • January 29, 2015 at 9:21 pm #224323
    Tran
    Member
    • Topics: 3
    • Replies: 3
    • ☆

    Dear Sir/ Madam.

    I have one question which want to ask you. Please help me to answer it.
    Question:
    input 3000 units at the cost 45600$
    normal loss 5%
    actual output 2800.
    calculate the cost per unit output.

    Answer.

    Cost per unit= 45600/(3000*95%)= 16.

    Is that true? Because the question has not mentioned about the scrap value so I am not sure about this answer. Can you help me to give the right answer?

    Thank you.

    January 30, 2015 at 7:40 am #224355
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54707
    • ☆☆☆☆☆

    The answer is correct.

    If there is no mention of a scrap value then you assume that there is none (that the losses actually are lost 🙂 ).

    The costing is done over the units we expect to produce – i.e. 3000 x 95%.

    January 30, 2015 at 1:32 pm #224394
    Tran
    Member
    • Topics: 3
    • Replies: 3
    • ☆

    Thank you so much Sir.

    January 30, 2015 at 1:52 pm #224397
    Tran
    Member
    • Topics: 3
    • Replies: 3
    • ☆

    I have one more question and want to ask u.

    this year output 5000 units the overhead cost $ 31000
    3 years ago, output 2000 units the overhead cost $ 8800.

    the price index 3 years ago was 132 and this year is 164.
    using high low method calculate the variable cost per unit in current year prices.

    Answer:

    variable cost per unit= (31000-8800)/(5000-2000)= 7.4

    but this is the wrong answer. Can you tell me the right way to do ?

    January 31, 2015 at 10:53 am #224475
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54707
    • ☆☆☆☆☆

    You need to apply the price index to the cost of 8,800.
    Multiply the 8,800 by 164/132 and then use the high low method.

  • Author
    Posts
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