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4000kg of material are input to a chemical process. Normal losses are expected to be 10% of input and because of their toxic nature will incur a disposal cost of 2 per kg.
the process cost $11800 and actual output was 3550kg, what is the total cost of the abnormal loss?
process costs $11800 4000units
normal lost @disposal:800 (400)
Total: 12600 3600cost pu: 12600/3600: 3.50
abnormal loss: 3600-3550= 50kgcost of abnormal loss 50@ 3.50+2= 275
This was from my kaplan book. Sir, in your lectures, we always deduct the scrap value. but in here they added it, why? and also the cost of abnormal loss.. we also deducted it from your lectures but in here they added it from the cost of unit.. Please explain what’s happening. Thankyou
This question does not have a scrap value.
The $2 per kg is not scrap proceeds, it says it is the disposal cost because it is toxic. So they are paying $2, not receiving it.
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Hi
I want to ask in PROCESS COSTING- the exercise doesn’t tell you whether to use FIFO or AVCO- and how do you know when to use FIFO or AVCO?
THANKS IN ADVANCE
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