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Input is 5,000 units and normal loss is anticipated at 5 per cent. Normal loss units are
A500
B50
C250
D125
Answer & Solution
Correct answer: C. 250
1. Normal loss is expressed as a percentage of input.
2. Normal loss units = 5 per cent of 5,000.
3. = (5 / 100) x 5000 = 250 units.
4. Good output would then be 4,750 units before considering any abnormal loss.
_Source: ICAI Cost and Management Accounting Ch10 'Process and Operation Costing', Example 1_
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