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Cost totalling $4250 were incurred in a period.
80 units if output were rejected and destroyed in the period,20 units more than allowed for as a normal loss,leaving 420 units of good production to be transfarred to finished goods..
What is the amount written off as abnormal loss?If things had gone as expected, normal losses would have been made so 440 units would have resulted (actual plus the 20 abnormal/unexpected loss). Cost of output is always valued as though only normal losses were incurred so, for a cost of 4250 and expected output of 440 the cost per unit is 4250/440 = 9.66 per unit.
These units are either good units or some might be discovered to be abnormally lost. Here 20 must be thrown away at a cost of 9.66 x 20=193.2
Thank you very much sir. Thats the answer i found but was confused as the bpp rev kit was showing the answer to be $170
The rev kit answer was $170 , $4250/500=$8.5
$8.5× 20 units= $170
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