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Process Costing BPP Question

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Process Costing BPP Question

  • This topic has 1 reply, 2 voices, and was last updated 11 months ago by John Moffat.
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  • Author
    Posts
  • February 19, 2022 at 1:37 pm #648899
    bazif17
    Participant
    • Topics: 11
    • Replies: 1
    • ☆

    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,

    February 19, 2022 at 10:20 pm #648913
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51582
    • ☆☆☆☆☆

    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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