The following information is available for a production process for the last period: Material input Labour input Department overhead Transfer to finished goods 200 kg at $4 per kg 100 hours at $15 per hour $1,000 150 kg Normal loss is 10% of input. Losses are identified when the process is 50% complete. There is no opening or closing work?in-progress. What is the total cost of a completed unit?
A. 22
B. 20.48
C. 19.59
D. 18.33
Correct answer is 19.59
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Help me with this question please!
3y ago#1The total loss is 50kg, of which 20kg is the normal loss and 30kg is the abnormal loss.
For materials, we spread the cost over the expected output (actual output + abnormal loss) of 180kg. So the material cost per kg is $800/180 = $4.44
The approach is the same for labour and overheads, except that the abnormal loss will only have had half of the labour and overhead work. So we spread the total of $2,500 over 165kg (150 + 30/2). So the cost per kg is $2,500/165 = $15.15
So the total cost per kg is 4.44 + 15.15 = $19.59
(I am surprised that your book is not showing the workings :-) )
Thank you. Yes it does show the working but I couldn't follow it properly or understand some steps, it doesn't explain like you do. Thank you once again.
3y ago#3You are welcome :-)
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