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John Moffat.
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sxhawty
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ABC manufactures a single product x in a single process. Normal loss (scrap) in the process is 10% of output and scrapped units can be sold off for $4/units
no opening and closing inventory. Process costs of direct materials, direct labour and production overheads totalled $184,800. Input to the process in the month was 13,200 units
the answer in the exam kaplan exam kit says that the cost/unit produced is $15.00
what i do not get is that in your lecture, to get the normal loss you simply multiply 13,200 to 10%.. but in the book it says 13200*10/110??? my doubt is why are they dividing it by 110 then?
John Moffat
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In the example in my lecture, the normal loss is 10% of input.
In this question the normal loss is 10% of output. So for every 100 output, 10 must have been lost, and therefore 110 must have been input.
So the normal loss is 10/110 x the input.
sxhawty
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