Cima C01 Exam Question No 32

Question No 32:

A company produces a single product that passes through two processes. The details for process 1 are as follows:

Materials input                        20,000 kg at $2·50 per kg
Direct labour                            $15,000
Production overheads             150% of direct labour

Normal losses are 15% of input in process 1 and without further processing any losses can be sold as scrap for $1 per kg.
The output for the period was 18,500 kg from process 1. There was no work-in-progress at the beginning or end of the period.
What value (to the nearest $) will be credited to the process 1 account in respect of the normal loss?

A. Nil
B. $3,000
C. $4,070
D. $5,250

Answer: B