ExpertMedium2 marksShort Answer
Specialist cost and management accounting techniquesSyllabus BEnvironmental Management AccountingInput Output Analysis
ACCA · Question 19 · Specialist cost and management accounting techniques
Section B - Case 1: AquaHarvest
AquaHarvest operates a sustainable offshore kelp farm. They use an input/output analysis for their kelp processing plant. In May, 10,000 kg of raw wet kelp was input into the process. The process yielded 2,000 kg of dried kelp product. The remaining weight was lost as water evaporation (which has no cost) and solid organic waste. The solid organic waste amounted to 1,500 kg. The cost of raw wet kelp is $2 per kg.
Under input/output analysis, what is the material cost of the non-product output (solid organic waste)? (Enter your answer as a whole number).
Section B - Case 1: AquaHarvest
AquaHarvest operates a sustainable offshore kelp farm. They use an input/output analysis for their kelp processing plant. In May, 10,000 kg of raw wet kelp was input into the process. The process yielded 2,000 kg of dried kelp product. The remaining weight was lost as water evaporation (which has no cost) and solid organic waste. The solid organic waste amounted to 1,500 kg. The cost of raw wet kelp is $2 per kg.
Under input/output analysis, what is the material cost of the non-product output (solid organic waste)? (Enter your answer as a whole number).
How to approach this question
Multiply the quantity of solid organic waste by the cost per kg of the raw input material.
Full Answer
In Environmental Management Accounting (EMA), the material cost of non-product output is the purchase cost of the materials that end up as waste.
Solid organic waste = 1,500 kg.
Cost per kg of raw input = $2.
Material cost of non-product output = 1,500 kg * $2/kg = $3,000.
Common mistakes
Trying to calculate the cost of the evaporated water, or allocating the total input cost ($20,000) across the good output only.
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