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