Question

Answer in brief:

How do you record the cost of insurance in transit for an equipment you are importing from abroad?

Give example of a cost which will not be considered in the calculation of depletion base, despite being related to the extraction of natural resources in concern. Why?

Why do we use shapley value method?

How do you record abnormal and normal spoilage?

Answer 1

B. Why do we use shapley value method?

Answer: The Shapley value is a solution concept of fairly distributing both gains and costs to several actors working in coalition.This method applies primarily in situations when the contributions of each actor are unequal, but they work in cooperation with each other to obtain the payoff. when two or more players or factors are involved in a strategy to achieve a desired outcome or payoff. The Shapley value applies primarily in situations when the contributions of each actor are unequal, but each player works in cooperation with each other to obtain the gain or payoff. Shapely value has many applications including business, machine learnings, and online marketing.

c. How do you record abnormal and normal spoilage?

Normal spoilage occurs even in the best of production environments. No matter how efficiently you work, you still incur normal spoilage. That’s because there are limitations to any production process. Normal spoilage not in anyone's hand. It must ne happened and uncontrollable. For example, if we buy pertol from somewhere, it must be happened that petrol will leak like a gas. It is uncontrollable.

Record of normal spoilage: In accounting process,normal spoilage should be deducted from the gross quantity of product which is purchased initially and cost of per product will calculate after reducing the quantity of normal spoilage from total quantityof raw material of product.

Abnormal spoilage is spoilage beyond what you normally expect in production. Accountants also define the term as spoilage that wouldn’t happen if you operated efficiently. If you have spoilage you can avoid, you have abnormal spoilage. It is controllable.

Record of normal spoilage: Cost of abnormal spoilage is calculating based on total cost of product and total quantity of product after deducting normal spoilage.

Formulae of cost of abnormal spoilage

Total cost of product*abnormal spoilage/Total number of prouduct.

A.How do you record the cost of insurance in transit for an equipment you are importing from abroad?

Cost of Insurance is a kind of expense which we spend on the insurance of products or material, mainly which are impoted, to protect from abnormal loss which might be happened on the way because of many reasons,like theft, natural calamity etc.

Amount of insurance are addable in the cost sheet forcalculating the cost of product or cots of consignment. it should be added while calculating total cost of product.