Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Process costing
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- November 27, 2020 at 5:16 am #596625
Input materials(500 litres) $3000
Labour and overhead $2670Normal output is expected to be 9 litres for every 10 litres inout
Actual output was 460 litres
What is the cost per unit of finished output( to 2 d.p)
Sir why isnt there a scrap value in this question when we try to calculate avg cost/unit
Because in the theory to calculate avg cost/unit we
add all the (input cost+ conversion cost-normal loss(valued at scrap))/input units -normal lossSir I got all the figures correctly but im confused to why we don’t deduct the scrap value of normal loss as the numerator
And why they haven’t mentioned scrap value at all?????
The question has deducted the normal loss units in the denominator, doesn’t that mean that we have to deduct the numerator(normal los at scrap value)???
November 27, 2020 at 9:23 am #596652As I do explain in my lectures, there does not have to be a scrap value. Units can simply be lost (especially when it is liquid – for example, if you boil liquid them some of it simply disappears as steam).
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