Question 9.RQ.1.5: Data for questions 1.5–1.7 X plc makes one product, which pa...
Data for questions 1.5–1.7
X plc makes one product, which passes through a single process. Details of the process are as follows:
Materials: 5,000 kg at 50 p per kg
Labour: £ 800
Production overheads 200% of labour
Normal losses are 20 per cent of input in the process, and without further processing any losses can be sold as scrap for 30 p per kg.
The output for the period was 3,800 kg from the process.
There was no work in progress at the beginning or end of the period.
1.5 What value will be credited to the process account for the scrap value of the normal loss?
(A) £ 300
(B) £ 530
(C) £ 980
(D) £ 1,021
1.6 What is the value of the abnormal loss?
(A) £ 60
(B) £ 196
(C) £ 230
(D) £ 245
1.7 What is the value of the output?
(A) £ 3,724
(B) £ 4,370
(C) £ 4,655
(D) £ 4,900
1.5 : (A)
Normal loss 5,000 kg × 20% = 1,000 kg @ 30 p = £300
1.6 : (C)
Abnormal loss kg
Input 5,000
Normal loss (1,000)
Output (3,800)
Abnormal loss 200
Production costs £
Materials 2,500
Labour 800
Production overheads 1,600
4,900
Cost per kg = \frac{£4,900 – £300}{4,000*} = £1.15 per kg
*Output 3,800 + abnormal loss 200 = 4,000 kg
Abnormal loss £1.15 × 200 kg = £230
1.7 (B)
Value of output = £1.15 × 3,800 kg = £4,370.