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Finished Inventory

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Finished Inventory

  • This topic has 1 reply, 2 voices, and was last updated 11 years ago by John Moffat.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • November 4, 2014 at 11:45 pm #207747
    Shanda
    Member
    • Topics: 46
    • Replies: 44
    • ☆☆

    The following data relates to a process;
    Material input $8000{for 200 units]
    Conversion costs $8480
    There is a normal loss of 3% of input, and all losses are sold as scrap at $16 per unit. The actual loss in this period is 80 units. What is the total value of the finished units?

    My calculation :
    normal loss is 2000* 0.3 =60 units at $16 =$960
    since actual loss is 80 units which is 20 more normal loss there is an abnormal loss of 20 units at $320
    $8000 + $8480 =16480
    $960+$320=1280
    total value of finished output :$16480-$1280=$15200

    Where did I go wrong?

    November 5, 2014 at 1:03 pm #207813
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54831
    • ☆☆☆☆☆

    I seems that you have not watched the lecture on process costing, and I suggest that you do!

    We cost out over what we expect to produce.

    Therefore the cost per unit is (8000 + 8480 – 960) / (2000 – 60) = $8 per unit

    The output is 1920 units x $8 = $15,360

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