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Hey,
The following data relates to a process:
Material input 8000 (For 2000 units)
Conversion cost 8480There is a normal loss of 3% of input and all losses sold as scrap at $16 per unit.
The actual loss in this period is 80 units.
What is the total value of the finished goods?15200
15520
16310
15360The answer is 15360, but I do not know did we get the asnwer.
Can you please explain?
Thank you!
You really should watch the free lecture on process costing!
You do the costing on what is expected to happen (which is a loss of 3% of 2,000 = 60 units).
So the cost per unit is (8,000 + 8480 – (60 x 16)) / (2,000 – 60) = $8
The actual finished units are 2000-80 = 1920, and these are valued at $8 per unit.
If question to ask what’s the actual output whether is 2000-60-80=1860x$8=$14,880 ?
thank youIf the input is 2,000, and if the actual loss is 80, then the actual output is 1,920.
hi sir, what about the loss of 2000 x 10%=60units?
my working :
dr input 2000 unit $8000
dr.conversion cost $8480
total : 2000 units & $16480cr.output/fg 1860 units $14880
cr.normal loss 60units $960
cr.adnormal loss 80units $640
total : 2000 units & $16480thank you
The question does not say there is an abnormal loss if 80.
It says that the actual loss is 80 (so the abnormal loss is 20).
My workings earlier are correct.
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