Normal Losses – FIFO

Simple Built (Pty) Ltd (SB) operates a process costing system to manufacture one type of a specialised high-end building cement (DiamondMix). The company uses the first-in-first-out (FIFO) method to value all its inventories.
. Direct labour and manufacturing overheads are incurred evenly throughout the cement manufacturing process. At 70% completion point, the cement is tested for both quality and consistency to the standards as prescribed by the South African Bureau of Standards (SABS). At that point (70%), 1 in 8 kilograms (kg) of the cement does not pass the quality and consistency test and is regarded as normal loss. The loss units are sold to Selepe Brick Blocks, an upcoming brick manufacturing company, at R2,45 per kg.

Opening Finished Goods – 8500 kg

Opening WIP(65% complete) – 12500kg

Current period input – 165500kg

Completed & transferred -135000kg

Closing WIP – (80% Complete) – 15500

Closing finished goods – 0

Question:

How do I get my normal losses in units when production is at 70% completion.

Do I use the units introduced (165 500kg * 1/8) or I have to use the (178 000kg(ie Opening WIP +Current input) * 1/8).

How do I do the quantity schedule in this scenario. Please help!!!!!

Kind regards

TE Mashila.