In August, JXZ Limited used 7,500 litres of input materials to produce 7,240 litres of body lotion at a cost of £18,900. Conversion costs for the process were £9,840. Waste products from the body lotion process are sold for 40 pence per litre. Normal losses from the body lotion-making process are expected to be 4% of input materials. What is the production cost of 7,240 litres of body lotion in August?

Question

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The production cost of 7,240 litres of body lotion includes the cost of input materials (£18,900) and conversion costs (£9,840), totaling £28,740. However, normal losses are expected to be 4% of 7,500 litres, which is 300 litres. These 300 litres of waste can be sold for 40 pence per litre, generating £120 (300 litres * £0.40). Subtracting this from the total costs (£28,740 - £120), the adjusted production cost is £28,620. However, since this option is not available and considering the calculation might involve a mistake in the interpretation of the options provided, the closest correct option based on the initial calculation steps would be £28,740, but since that's not the correct interpretation according to the options, it seems there was a mistake in the calculation explanation. The correct approach should consider all costs and revenues correctly, but without the exact breakdown leading to the options given, there's a misunderstanding in the calculation provided. Given the options and the mistake acknowledged, the correct answer intended seems to be C) £28,779, acknowledging a mistake in the detailed calculation explanation.

In August, JXZ Limited Used 7,500 Litres of Input Materials