Hi Sir, please help me to answer the question below.
material input $8,000 (2000 units)
conversion $8,480
there is a normal loss 3% of input, and all losses are sold as scrap at $16 per unit.
actual loss in this period is 80 units.
what is the total value of finished units?
the answer is $15,360 but i don't understand why.
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10y ago#1I really do not think you have been watching our free lectures, and I cannot possibly type them out here!
Our lectures are a complete course for Paper F2 and cover everything you need to be able to pass the exam well.
The expected production is 2,000 - (3% x 2,000) = 1,940
Therefore the cost per unit = ($16,480 - (60 x $16)) / 1,940 = $8 per unit
The actual output is 2,000 - 80 = 1,920 and therefore the value is 1,920 x $8 = $15,360
Thank you!
10y ago#3You are welcome :-)
Hello Mr Moffat,
about the above mentioned question:
actual output = expected output - abnormal loss
I assumed actual loss amounts to abnormal loss so actual output would be :
1940-80=1860.
I'm sure I'm wrong...but not sure :-) please help
thank you :-)
10y ago#5The actual loss is equal to the expected (normal) loss plus the abnormal loss (or less any abnormal gain).
Here, the normal loss is 3% x 2000 = 60.
The actual loss is 80 (from the question).
And therefore the abnormal loss is 80 - 60 = 20 units.
The actual output = 2,000 - 80 = 1,920.
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