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Process Costing BPP Question

BBazif4y ago
Good Afternoon, I am struggling on one question in the BPP revision kit. Q) Ellis Co uses process costing to value its output. The following was recorded for the period: Input materials 2000 units at $4.50 per unit Conversion costs 13,340 Normal loss 5% of input at $3 per unit Actual loss 150 units There were no opening or closing inventories. What was the valuation of one unit of output to one decimal place? The calculations from the book says: Input = 2000 x 4.50 = 9000 Conversion = 13340 Normal loss = 5% x 2000 x 3 = 300 Expected = 2000 - 100 = 1900 Please can you explain where the 100 units came from at the expected section? Many thanks,
John MoffatJohn MoffatTutor4y ago#1
The input 2,000 units and expect to lose 5%. 5% x 2,000 = 100, so they expect to lose 100 units and expect to produce 1,900 units.
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