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godze26 says

Hi sir

Could you explain how you can do the calculation without the output units

The following data relate to a process:

The normal loss is 3% of input and all losses are sold as scrap for $8 per unit.

This period the actual loss is 80 units. There is no work-in-progress.

What is the total value of the finished units this period.

John Moffat says

You cannot do this without knowing how many units were output (or alternatively. how many units were input – you can then work out how many were output).

Also, of course, you need more information about the costs to be able to value the finished units!

godze26 says

Hi sir

I saw this question in the mock exam on the open tuition mock exam and i did not see an option in the answer to say that the question needed more information.

John Moffat says

You have only typed a tiny bit of the question. The question says against materials how many units are input (and so you can calculate the output). The question also tells you all the costs.

godze26 says

There is no other parts to the question just the options for the answers

John Moffat says

I have just checked – the whole question is there!

godze26 says

I am just seeing that the question i posted did not include the top section showing the input units and costs. Sorry about that but in any case how is that calculation without the output units

John Moffat says

Since you know how many units were input, and you know how many were actually lost, then the difference is the output.

godze26 says

So would this calculation be correct

Normal loss 2000* 3% = 60

Expected output 2000-60 = 1940

Abnormal loss 80-60 = 20

Cost per unit: (4000 – 60) + 3120/1940 = $3.63

Value units

Out put 1940 * $3.63 = $7042, Normal loss 60 * $8 = $480, Abnormal loss 20 * $8 = $160

Therefore $7042 + $480 + $160 = $7682

godze26 says

This question also came from the mock test.

I know that once the return on investment is lower than cost of capital then the residual income will decrease but do you reason out the return on investment part of it

An investment division earns a return on investment of 15% and a residual income of $200,000. The cost of capital is 18%. A new project gives a return on capital employed of 16%.

If the new project is accepted, what will happen to the investment division’s return on investment and

residual income?

Could you provide guidance how to answer this question as well.

1. A company manufactures a single product. Budgeted production for the first three months of next year is as follows:

Each unit uses 4kg of raw material costing $5 per kg.. The budgeted raw material inventory at the end of each months is to be 20% of the following month’s production.

What are the budgeted raw material purchases for month 2 of next year?

2. At the start of the year a company employed 2,000 employees.

During the year 400 employees left the company.

At the end of the year there were 2,200 employed.

What was the labour turnover rate for the year (to the nearest %)?

my issue was to determine the number of replacements with this one

3. What would be the effects on the EOQ and the total annual order cost of an increase in the holding cost per unit.

I can figure the EOQ section cause i plug in figures to help me but not sure about the annual holding cost bit

godze26 says

Guidance on this well too. i figured P but cannot get Q at all.

Two investments are available. Investment P offers interest of 5% per year compounded half-yearly for a period of 4 years. Investment Q offers one interest payment of 18% at the end of its 4 year life.

What is the annual effective interest rate offered by each of the two investments?

It would have been nice if the system showed how the answers were derived so students can know where they went wrong in procedures.

John Moffat says

Process costing: If the question asks you to value the finished units, why have you valued the losses also?

Return on investment: The new project gives a return that is higher than the current ROI, so the ROI will increase.

Budgeting: you have not typed what the production is for the first three months of next year, so it is impossible to answer.

Employees: if 400 left, and there were more employees at the end of the year than at the beginning, it must mean that all 400 were replaced.

EOQ: The question does not ask about the annual holding cost – it asks about the annual order cost. Since the EOQ will be smaller, there will have to be more orders, so the annual order cost will increase.

Interest: If r is the annual interest rate, the (1+r)^4 = 1.18

PLEASE: do not post all these questions under a lecture on Process Costing. This section is for comments on the lecture.

If you have other questions then post them on the Ask ACCA Tutor forum.

godze26 says

Sir

could you really please answer the process costing question cause i just cant seem to figure out hiw to derive the cost per unit

godze26 says

I have figured it out now. Normal loss 2000 *3% = 60

Expected output 2000-60 =1940, output 2000-80 = 1920

Normal loss 60 * $8 = 480. Cost per unit 4000 -480 +3120 + 1120/1940 = $4

Finish goods 1920 *$4 = 7680

godze26 says

Sorry about the questions in the wrong forum. I valued the losses as that was the only i could come close to the correct answer given by the system. I am confused about it

calvince85 says

John, you are the best! Many many thanks for the good lectures! They are truly helpful. God bless you very much.

calvince85 says

John, you are the best! Many many many thanks! God bless you for good work!

saqibsheeraz says

Excellent !