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Hello sir. I have worked this question and i have obtained $ 3.72 as answer but in the mcqs the correct answer was $3.92.
Please could you confirm if the answer is correct..Q During last month 20000 kg of material were input to a process. Losses of 5% were expected. Actual output was 18 500 kg and there was no opening and closing work in progress. Process costs for last month were $ 74 480. What was the cost per kg of last month’s output (to the nearest $0.01)?
$3.92 is correct.
The cost per kg is always calculated based on the expected production (ignoring any abnormal gains or losses).
The expected production is 20,000 – (5% x 20,000) = 19,000
Therefore the cost per kg = 74,480 / 19,000 = $3.92
I do suggest that you watch my free lectures on process costing. The lectures are a complete free course for Paper F2 and cover everything needed to be able to pass the exam well.
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