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Good Day Sir
Please help with the following:
Materials input(2000 units): $4000
Labour: $3,120
Overheads:$1,120Normal loss is 3% of input and losses sold at a scrap of $8 p/u. Actual loss is 80 units. There is no WIP. What is the value of the finished units
My answer:
units $
Input: 2,000 4,000
NL: (60) (480)
Total 1,940 3,840AL (80) (640)
finished units=1,860 3,200Is the value of $3,200 correct?
Thanks
ZuzieNo – your answer is wrong.
Why have you ignored the labour and overheads?
The total cost is: 4,000 – 480 + 3,120 + 1,120 = 7,760
The units are 1940 (as you have)
So the cost per unit is 7760/1940 = $4
The finished units are 2,000 – 80 = 1,920.
So the cost of the finished units is 1,920 x $4 = $7,680
I do suggest that you watch the free lectures on process costing.
Hi John
I did watch the lectures but obviously need to go through them again!
Thank you for your help, ur the best 🙂
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