Question

a.Consider the cooking department of AD food ltd :during May 3000 unit valued at 400500 were...

a.Consider the cooking department of AD food ltd :during May 3000 unit valued at 400500 were transferred from process 1 to process 2:other cost incurred during the month were:

Direct material added: $120,000

Direct labour: $130,000

Production overhead $97,000

400 units were scrapped during the period, normal losses were estimated to be 8 1/3 % of the input during the period. The scrap value of any loss is $32.00 per unit.

a i. Calculate the normal loss units and value

b. iiCalculate the abnormal loss/gain units

please provide visible details so that i can eaily follow. if posiible could it be done in a t account settings

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Answer #1

A. Calculation of normal loss units and value

Particulars Amount (in $)
Units transferred 400,500
Direct Material 120,000
Direct labour 130,000
Production overhead 97,000
Total cost for 3000units 747,500

Cost per unit =$747,500/3000=$249.17

Normal loss (in units)= 3000units*8.33%=250units

Normal loss(in $)= $[250units*(249.17-32)]=$54,292.5.

B. Table showing abnormal loss in units

Particulars No of units
Total loss 400
- Normal loss 250
Abnormal loss 150

Therefore the abnormal loss in units is 150.

Abnormal loss (in $)= $[150*(249.17-32)]=$32,575.5

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