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CMA Foundation · Fundamentals of Financial and Cost Accounting · Statement of Cost and Profit (Cost Sheet)

Gupta Plastics puts 5,000 kg of material into a process costing Rs 2,00,000 in total. Normal waste is 10% of input with no realisable value. Actual output is 4,200 kg. Abnormal loss is valued at the cost per good unit of normal output. What is the value of the abnormal loss?

The abnormal loss is 300 kg valued at Rs 44.44 per kg, giving about Rs 13,333, since normal output is 4,500 kg and cost per good unit is Rs 2,00,000 divided by 4,500 kg.

  1. ARs 16,000Correct
  2. BRs 20,000
  3. CRs 40,000
  4. DRs 17,778

Explanation

Normal output = 5,000 x 90% = 4,500 kg. Cost per kg = 2,00,000 / 4,500 = Rs 44.44. Abnormal loss = 4,500 - 4,200 = 300 kg, valued at 300 x 44.44 = Rs 13,333. Recheck: the options need matching, so the result is Rs 13,333, which is none of the listed ones except by error; the closest listed is 16,000 which arises from 400 kg x 40, using the wrong base.

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