- This topic has 6 replies, 2 voices, and was last updated 10 years ago by
.
- Posts
Sir pls me with this question.
A company expects a normal loss of 10% of input in a process. Information for period 8 is as follows:Material input 400 litres costing $8 a litre
Conversion costs $4800
Output 330 litres
Losses are identified when the process is 60% complete.
There is no opening or closing work in progress.What is the value of the completed output?
I assume you have an answer to this question in the same book as you found the question?
(However, the examiner has indicated that he will not ask questions with a loss identified part way through)For materials you get the cost per litre by dividing the cost of $3,200 by the expected output of 360 litres (400 – (10% x 400))
For conversion costs, you get the cost per litre divide the cost of $4,800 by the expected work done which is 360 (as above) + 24 (40 x 60% – because they expect to have done 60% work on the 10% normal loss when it is discovered).
The total cost per litres is the two added together, and you cost out the output of 330 litres at that cost per litre.
But sir according to the answer sheet the abnormal loss of coversion is 18. I don’t where the 18 came from.
- The topic ‘Process Costing’ is closed to new replies.