CA Inter P4 · Chapter 9 · Question 1 of 11
In Process I, 10,000 kg of material was introduced at ₹24 per kg and conversion costs were ₹1,32,000. Normal loss is 8% of input and has a scrap value of ₹5 per kg. Actual output was 9,000 kg. The value of abnormal loss is:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) ₹8,000
Explanation
Total cost = ₹2,40,000 + ₹1,32,000 = ₹3,72,000. Normal loss = 8% x 10,000 = 800 kg, scrap value ₹4,000. Normal output = 9,200 kg. Cost per kg = (₹3,72,000 - ₹4,000) / 9,200 = ₹40. Abnormal loss = 9,200 - 9,000 = 200 kg, valued at 200 x ₹40 = ₹8,000.
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