the following information relates to a company polishing process for the previous period
output to finished goods 5408 units valued at $29744
normal loss 276 units
actual loss 112 units
all losses have a scrap value of $2.50 per unit and there was no opening or closing work in progress
the value of the input during the period was?
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process costing
8y ago#1The polishing cost of a unit of output is $29,744/5,408 = $5.50
This is also the cost per unit of any abnormal loss (because it was supposed to be good output) and abnormal gain. The abnormal gain is 164 units (276 - 112)
Input (units) = Actual output + Actual loss = 5,408 + 112 = 5,520
Input = Actual output + Normal loss - Abnormal gain = 5,408 + 276 - 164
Putting values to these, input = 29,744 + (276 x 2.50) - (164 x 5.50) = 29,532
Another way of looking at is considering:
Cost per unit ($5.50) = [Total cost incurred (x) - expected scrap (276 x $2.50)]/Expected good output
Expected good output was only 5244 (i.e. 5408 - 164 )
Rearranging, x = (5,244 x 5.5) + (276 x 2.5) = 28,842 + 690 = 29,532
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