Pcr Unit 9 Accounting For Losses

zoeeileen

Hi All

I am really hopeing someone can help me.

I keep doing past papers, sometimes on the past papers when you are asked to do the production budget they ask you to take account of losses , but sometimes they ask you to take account of losses in the Materials purchases budget, i have looked at quite a few papers and it really does not seem clear.

Such as in June 2005 paper task 1.1 i took an account of 4% losses for Aston, whereas this should not have been done should have been done later on in Material Purchases Budget.

I am getting confused.

Thankyou Zoe

SandyHood

Zoe

Reading the question is central to the examiner's feedback.
Read it 5 times.

By that time you will know:

1. If the losses take place in production. This is where you need to first find how many to make to fullfill the sales and stock requirements AND THEN gross that up to take account of wasted finished goods.
2. If the losses take place in the materials. These questions require you to calculate how much material is needed to make the production required. You then gross this up to take account of evaporation or other losses of materials. Very much like the normal loss in process costing.