- This topic has 4 replies, 2 voices, and was last updated 8 years ago by
.
- Posts
just like idle time of workers are not linked to the cost unit as direct cost. similarly if while producing a particular cost unit an inefficient labor used up more material than the standard quantity for a unit because of wastage.In that case the cost of wastage of material will it be linked to the cost unit for which it was taken up as direct cost and be a part of inventory value of that particular cost unit or it will be reducted as expenses from income st.
specially in case of a job costing.
another question in process costing any normal loss of units that happen that cost is borne by expected output of units.In that case how can we say exactly how much material get consumed in each unit because there are some units lost. or we assume the units we put into process get used up for producing the expected units of output.so dividing the total units of material by no. of units of output will tell us direct material consumed per unit
i mean to ask do the normal loss of units in process are also assumed to be consumed up by the output and so become the part of direct material cost of the outputs.
With regard to your first question, it is not really relevant for Paper F2 (except, of course, in variance analysis). The inventories would be valued at standard cost (which would include any expected wastage) and any extra wastage would be charged separately in the Statement of profit or loss.
- You must be logged in to reply to this topic.