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To whom it may concern,
I require your assistance with the following question on process costing.The following is relevant data to a process:
Input materials 500kg @ $12 per kg Normal loss: 10% of input
Overhead cost $1000 Scrap value of losses $5 per kg
Labour cost $4800 Actual loss 70kg
Expenses $2000Calculate the value of output, rounded to the nearest $.
Try as I may I simply cannot get the right answer and thus need your help. A compact but detailed walkthrough on getting the answer would very much be appreciated.
Thank you for your assistance.
No my good man. The question which you have helped me with earlier was regarding accounting for material. If you have answered this question elsewhere on the forum than I apologize for repeating the question. Any help at all would very much be appreciated.
The total cost (net of normal loss) is (500 x 12) + 1000 + 4800 + 2000 – (50 x 5) = 13,550
The expected output is 500 – (10% x 500) = 450 kg
So the cost per kg is 13,550 / 450 = $30.11111So the value of the output is 500 – 70 = 430 kg x $30.111111 = $12,948
Thank you very much sir! My working was about the same as yours although I wasn’t sure what to do with the expenses. Anyway, based on your answer sir, I can say with conviction that the answer provided by the book from which I did this particular question is wrong. By the way sir, THANK YOU SOOO MUCH for your process costing lectures. It helped me a ton! My lecturer isn’t really competent. You are a blessing to mankind. You should receive a Nobel Prize for your contribution to society. Thank you sir John Moffat, you are my superhero.
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