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Co. Uses process costing . During a recent period of 12,000 litres of product were output from one of co’s manufacturing process . There is a normal loss of 10% input volume. There was an abnormal gain of 500 litres during the period .
How many litres were input to the manufacturing process in the period ?If there had been no abnormal gain, output would have been 12000 – 500= 11500. This is the expected output.
The relationship between input, normal output and normal loss is:
Input 100 – Normal loss 10 = Expected output 90
Using proportions:
So for normal production Input = Expected output x 100/90
Here, Input = 11,500 x 100/90 = 12778.
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