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process costing

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › process costing

  • This topic has 1 reply, 2 voices, and was last updated 9 years ago by John Moffat.
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  • June 23, 2016 at 5:47 pm #323918
    sxhawty
    Member
    • Topics: 56
    • Replies: 25
    • ☆☆

    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?

    June 24, 2016 at 7:42 am #323965
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    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.

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