Question

ABC Industries has total costs of $50,000 on Job 2765. 10,000 units were completed but 500 of them did NOT pass quality control testing. The spoiled units could not be sold. Assuming the spoilage occurred because of some technical specifications solely related to Job 2765, what was the cost per unit for Job 2765? O 5.00 5.26

Answer 1

Spoilage due to technical specifications is of abnormal loss as it was not lost due to natural process in production process such as wastage, evaporation etc. Abnormal loss is charged to profit & loss account where as normal loss is absorbed by the good units or actual units produced. So Cost per unit for Job 2765 is-(Total cost/Total units) (50000/10000)-$5.00 Answer is S 5.00/.