Dear John,
I have seen a question on forum. Student has given answer and wanted to verify only.
I tried that question . I managed to find out units of input but I am unable to find its value. Please can you solve it for me. I shall be very grateful.
Question : Edgarise Co uses process costing to value output.During the last month the following information was record:
Output : 2800kg -$7.50/kg
Normal loss : 300kg , scrap value of $3/kg
Actual loss : 200kg
What was the value of output?
Kind regards,
Irum
ACCA Forums
MAProcess costing
Sorry what was the value of input?
12y ago#2Hi Irum
The value of the output is 2800 x 7.50 = 21,000
The normal loss is entered at the scrap value 300 x 3 = 900
(although you do not need to use a t-account, both of these amounts would be entered on the credit side of the process account)
Because the actual loss is only 200 kg, it means there is an abnormal gain of 100 kg. This is valued at the full cost per kg of 7.50, so a total of 100 x 7.50 = 750.
(this would be entered on the debit side of the account).
This therefore results in a value for the input (the missing figure) of 21000 + 900 - 750 = $21,150.
I hope that does help.
Thank you John :)
12y ago#4You are welcome :-)
12y ago#5pls can you explain how you got abnormal gain of 100kg?
12y ago#6The normal loss is 300 kg - this is what we expected to lose.
The actual loss is only 200kg.
Therefore these is an abnormal gain of 100 kg (300 - 200).
It may help you to watch my free lectures on process costing.
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