- June 16, 2020 at 7:23 pm
input 4000kg, normal loss 10% input and scrap val $2, process cost 11800, act output 3550
we are asked cost of abnormal lost.
now are we supposed to add 3.05 and 2 or substract it to find the answer?
there is a similar qstion wherein we are asked val of abnormal loss written off in the statement of prof and loss are these qstions the same?June 16, 2020 at 7:35 pm
I also have a question related to standard costing.
we’ve been given budgeted contribution 20000, act cotbn 15000, sales vol contrb 5000A, sales pr variance 9000F, fix overhead exp v 3000F and we are asked total variable cost variance.
they have solved it as 2000+9000-5000=24000-15000=90000A
what is the logic behind this solution? how do we decide which costs are to be considered?June 17, 2020 at 9:53 am
The abnormal loss is valued at the full cost per unit (3.05). The amount charged in the SOPL is 3.05 less any scrap proceeds received.
This is all explained 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.June 17, 2020 at 9:58 am
Second question (although please start a new thread when you are asking about a different topic. The reason is that our answers are for the benefit of everyone and many use the search box to see if there is already an answer to whatever problem they have) :
The whole purpose of calculating variances is to explain the difference between the actual and the budgeted contributions. The total of the variance must equal the difference. However because we are looking at the contributions here, the fixed overhead variance is irrelevant because fixed overheads do not affect the contribution.
Again, you really should watch my free lectures on this.
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