Question

12,000 kg of material was put into a process in a period. The normal loss is 10% of input. No opening or closing Work-in-Progress (WIP) is there. Output in the period is 10,920 kg. The abnormal loss/gain is:

• A. Abnormal gain of 120 kg
• B. Abnormal loss of 120 kg
• C. Abnormal gain of 1,080 kg
• D. Abnormal loss of 1,080 kg

Hint:

Actual output>Expected output → Abnormal gain.

Answer 1

The Correct Option is A

Input material = 12,000 kg
Normal loss = 10% of input = 10% of 12,000 kg = 1,200 kg
So, normal expected output = Input – Normal loss = 12,000 kg – 1,200 kg = 10,800 kg
Actual output = 10,920 kg
Since actual output is more than expected output, there is an abnormal gain.
Abnormal gain = Actual output – Normal output = 10,920 kg – 10,800 kg = 120 kg
Therefore, there is an abnormal gain of 120 kg.