ExpertMedium2 marksMultiple Choice
ACCA · Question 17 · Syllabus C: Cost accounting techniques
A synthetic meat laboratory uses process costing. During the month, 5,000 kg of material were input into the process. Normal loss is estimated at 10% of input. Actual output transferred to finished goods was 4,200 kg.
What is the abnormal loss or abnormal gain in kg?
A synthetic meat laboratory uses process costing. During the month, 5,000 kg of material were input into the process. Normal loss is estimated at 10% of input. Actual output transferred to finished goods was 4,200 kg.
What is the abnormal loss or abnormal gain in kg?
Answer options:
A.
300 kg abnormal gain
B.
300 kg abnormal loss
C.
800 kg abnormal loss
D.
500 kg abnormal loss
How to approach this question
Calculate expected output (Input - Normal Loss). Compare expected output to actual output. If actual is less, it's an abnormal loss.
Full Answer
B.300 kg abnormal loss✓ Correct
Input = 5,000 kg.
Normal Loss = 10% of 5,000 = 500 kg.
Expected Output = 5,000 - 500 = 4,500 kg.
Actual Output = 4,200 kg.
Since actual output (4,200) is less than expected output (4,500), there is an Abnormal Loss of 300 kg.
Common mistakes
Confusing total loss with abnormal loss, or mixing up abnormal loss with abnormal gain.
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