Carlo (Pty) Ltd values its inventory on the weighted average basis, using process costing. The company produces water bottles using only one production process. Carlo’s work-in-progress account for water bottles for the month of July 2024 was as follows:

Work-in-progress – Water bottles

 

Units

R

 

Units

R

Opening balance

(40% complete)

1 030

48 000

Finished goods

?

?

 

 

 

 

 

 

Newly started production

1 500

57 000

Normal loss

?

?

 

 

 

 

 

 

 

 

 

Closing balance (50% complete)

750

?

 

2 530

105 000

 

2 530

?



The normal loss (2% of input) occurred at the 35% stage of completion. No abnormal losses occurred.

 

The number of units of normal loss output attributable to finished goods for the month of July 2024 is nearest to:

	A.	
50.6 units

	B.	
35.29 units

	C.	
30 units

	D.	
21 units

To solve this problem, we need to determine the number of units of normal loss attributable to finished goods using process costing principles and given information.

### Step 1: Determine the total number of units introduced into production.
From the given dataTo solve this problem, we need to determine the number of units of normal loss attributable to finished goods using process costing principles and given information.

### Step 1: Determine the total number of units introduced into production.
From the given 
- Opening Work-in-Progress (WIP) = 1,030 units
- Newly started production = 1,500 units

Thus, the total units introduced into production = 
\[
1,030 + 1,500 = 2,530 \, \text{units}.
\]

### Step 2: Calculate normal loss in units.
We are told that normal loss is 2% of the input units. Since normal loss is based on the total input (both from the opening balance and newly started production):
\[
\text{Normal loss} = 2\% \times 2,530 = 0.02 \times 2,530 = 50.6 \, \text{units}.
\]

### Step 3: Determine the stage at which normal loss occurred.
The normal loss occurred at the 35% stage of completion, and the closing balance is only 50% complete. Therefore, only units that have progressed beyond 35% can be attributed to finished goods.

The closing WIP of 750 units is not yet 100% complete, so these are excluded from finished goods. Hence, all 50.6 units of normal loss are attributable to finished goods.

### Step 4: Nearest approximation of normal loss attributable to finished goods.
Since normal loss occurred at 35% completion and is 50.6 units, the **nearest answer** is:

**A. 50.6 units.**

Would you like any further details on this, or help with a different part of the problem?

### Related questions:
1. How would you calculate the cost per unit using the weighted average method?
2. What are the steps to calculate the value of finished goods in process costing?
3. How does the normal loss affect total production costs?
4. How would you handle abnormal losses in process costing?
5. What is the difference between FIFO and weighted average in process costing?

### Tip:
In process costing, always remember that normal losses are spread over completed units and work-in-progress at the same completion stage.

Carlo (Pty) Ltd values its inventory on the weighted average basis, using process costing. The company produces water bottles using only one production process. Carlo’s work-in-progress account for water bottles for the month of July 2024 was as follows: Work-in-progress – Water bottles Units R Units R Opening balance (40% complete) 1 030 48 000 Finished goods ? ? Newly started production 1 500 57 000 Normal loss ? ? Closing balance (50% complete) 750 ? 2 530 105 000 2 530 ? The normal loss (2% of input) occurred at the 35% stage of completion. No abnormal losses occurred. The number of units of normal loss output attributable to finished goods for the month of July 2024 is nearest to: A. 50.6 units B. 35.29 units C. 30 units D. 21 units

Learn how to calculate normal loss in a process costing system for Carlo Pty Ltd's water bottle production in July 2024. This example covers key concepts like the weighted average method and normal loss calculation. Understand how to attribute losses to finished goods and calculate the total units introduced into production.

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