Question

The cost of production of 40 units in Process I consisting of materials = 1,500; Labour = 1,300
and Overhead 164. The normal waste is 5% of input.
(a) 40 units are transferred to next asocess @ 370 each
(b) 40 units are transferred to next process @ 274.10 each
c) 38 units are transferrea to next process 678 each
id) 40 units are transferred to next process © 278 each​

Answer 1

Answer:

Normal loss = 40×5%=2 units

so the 38 units are transferred to next process @678

so option is (c)

Answer 2

The correct question is

The cost of production of 40 units in Process I consists of materials = Rs 1,500; Labour Rs 1300 and Overhead Rs 164. The normal waste is 5% of input.

(a) 40 units are transferred to the next process @ RS 70 each

(b) 40 units are transferred to the next process @ Rs 74.10 each

(c) 38 units are transferred to the next process @ Rs 78 each

(d) 40 units are transferred to the next process @ Rs 78 each

Solution

Given

Number of units in Process I = 40

Cost of materials = Rs 1500

Cost of Labour = 1300

Overhead = 164

Normal waste = 5% of the input

Calculations:

Number of units transferred to the next process =

                    Original units - (Original units x  Normal waste%)

                   = 40 - (40 x 5/100)

                  =  40 -2

                  = 38 units

38 units are being transferred to next process.

Total costing = Material+Labour+Overhead

                             1500+1300=164 = 2964

Cost of 38 units = Rs 2964

Cost of 1 unit = 2964/38 =Rs 78

Thus ,(c) 38 units are transferred to the next process @ Rs 78 each.

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