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John Moffat.
John Moffat.-
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zainrajput
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The following data relate to a process
Input
1,000 units at a cost of $2,700
Output
860 units
Normal loss
10% of input
No inventory is held
What is the cost per unit of the process output?
I calculated the cost per unit as 2.7 because whether the process is input or output the cost per unit is same, is that correct?
John Moffat
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Why are you attempting a question for which you do not have an answer? You should be using a Revision Kit from one of the ACCA Approved Publishers – they have answers and explanations!!
You answer is not correct. The expected output is 1,000 – (10% x 1,000) = 900 units.
Therefore the cost per unit is $2,700 / 900 = $3.
This is all explained in detail in my free lectures on process costing. The lectures are a complete free course for Paper MA and cover everything needed to be able to pass the exam well.
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