• 1 Marks

MI – Nov 2020 – L1 – SA – Q7 – Costing Methods

Calculate the quantity of goods production given wastage and abnormal loss.

A chemical process has a normal wastage of 10% of input in a period. A quantity of 2,500kg of material was introduced, and there was an abnormal loss of 75kg.

What quantity of goods production was achieved?

A. 2,175 kgs

B. 2,250 kgs

C. 2,325 kgs

D. 2,425 kgs

E. 2,625 kgs

A. 2,175 kgs

Explanation: The correct answer is A. To calculate the quantity of goods produced, we start by calculating the normal wastage and abnormal loss.

  • Input = 2,500kg
  • Normal wastage = 10% of input = 0.10 × 2,500 = 250kg
  • Abnormal loss = 75kg

The total loss is the sum of the normal wastage and the abnormal loss:

Total Loss=Normal Wastage  +  Abnormal Loss=250kg+  75kg   =325kg   

GoodsProduction=Input−TotalLoss=2,500kg−325kg=2,175kg

Thus, the quantity of goods produced is 2,175 kgs, making option A the correct choice.

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