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I am confused with this line:
“Further processing leads to a normal loss of 5% at the beginning of the process for each of the products being processed”
Material input in KG: 1,200
Specific variable cost of further processing: 0.5 per KGCalculate incremental cost of further processing.
Answer: $570
Since 1,200 KG is the amount of material you put in, shouldn’t it be $600 instead?
Reference : Kaplan revision kit QNS 217.
In future, you must ask in the Ask the Tutor Forum if you want me to answer – this forum is for students to help each other.
Because 5% are lost at the beginning of the further processing, they do not actual get any more processing (and therefore don’t incur any expense). Only the remaining 95% will get processed.
So 95% x 1,200 x $0.5 = $570.
I’m sorry, I forgot that existed. I’ll post my questions there next time. Thank you sir!
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