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John Moffat.
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jermy01
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Costs totalling $4,250 were incurred in a process in a period. 80 units of output were rejected and destroyed in the period, 20 units more than allowed for as a normal loss, leaving 420 units of good production to be transferred to finished goods.
What is the amount written off as an abnormal loss (to the nearest $)?
A $170
B $177
C $193
D $202answer: c
I don’t understand the question, please can u explain sir.
John Moffat
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Have you watched my free lectures on process costing?
To get the unit cost we spread the total cost over the expected output.
The expected /normal loss is 60 units (80 – 20), and they expected to produce 440 units (420 + 20). Therefore the cost per unit is 4,250 / 440 = $9.66.
So the value of the abnormal loss is 20 x $9.66 = $193
jermy01
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