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Why is it that when normal loss is given as a percentage of output, that the output figure becomes 110%?
E.g
– normal loss is 10% of output.
– there is no opening or closing inventory
– input is 13200 units
– total process cost is £184,800
– normal loss has scrap value of £4 per unitThe answer for amount of units of normal loss is 1200 units (13200/110×10) not 1320 units (13200×0.1)
I’m really confused as to why the output is perceived as 110% when normal loss is quoted as a percentage of output.
Thank you
The output does not become 110%.
If the loss is 10% of output, then for every 100 output the loss was 10 and it is therefore the input that is 110%.
Since they input 13,200, the loss is 10/110 = 1,200 and therefore the output is 13,200 – 1,200 = 12,000. So it works, the loss of 1,200 is 10% of the output of 12,000.
so the way to think about it is to think that the output must be 100% as a standard. Since there is a loss of 10% per output, in order for there to be 100% output 110% input must be inputted. therefore, even if there was no opening inventory or closing inventory left, the input would not = output right?
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