CAF-5 · Chapter 7 · Question 2 of 10
How is the scrap value of a "Normal Loss" treated when calculating the cost per equivalent unit of good output?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) It is deducted from the total process costs before dividing by the expected units of output.
Explanation
The formula for the cost of good output requires that the expected scrap value of the normal loss is deducted from the total process costs before dividing by the expected output.
More Process Costing MCQs
- Q4A production process has an input of 2,000 litres. The normal loss is estimated at 10% of the input. If the actual good output is 1,700…
- Q5At what value is an "Abnormal Loss" or "Abnormal Gain" recorded in the main process account?
- Q6If the actual loss in a manufacturing process is less than the expected normal loss, the resulting difference is known as:
- Q7Under the First-In-First-Out (FIFO) method of process costing, how are the equivalent units for opening Work-in-Progress (WIP) calculated…
- Q8When applying the Weighted Average method of process costing, how is the cost per equivalent unit calculated?