ACCA F2 Process Costing – Tests

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There is no lecture on Chapter 14 because you cannot be asked any calculations on alternative cost accounting.
All you need is what is written in the notes – you can read that yourself!

1. says

Good morning Sir,

Can you please help me with an answer to this question about Labour turnover rate: 3200 workers at the beginning of the year, during the year 1720 left, 2000 were at the end. After my calculation I got 1720[(3200+2000)/2 ]*100=66% but the answer given by the test is 20%?!

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In a company’s processes,product X is manufacturing using raw materials P and T which are mixed in the proportions 1:2. Material purchase prices are: P £5.00 per kilo,T £1.60 per kilo. Normal weight loss of 5%is expected during the process. In the period just ended 9,130 kilos of product X were manufactured from 9,660 kilos of raw materials. Conversion costs in the period were £23,796. There was no work in process at the beginning or the end of the period. Prepare the product X process account for the period. Thank you

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You cannot be asked to prepare a t-account in the exam, and I cannot write one up here.
However I will calculate the relevant figures for you (which obviously you can be asked).
I assume that you have watched my free lectures on process costing.

9660kg were input. Since P and T are in the ratio 1:2, P must be 1/3 of the input and T must be 2/3.
So the cost of the materials is for P, 1/3 x 9660 x \$5 = \$16100; and for T is 2/3 x 9660 x \$1.60 = \$10,304. So total materials cost is \$26,404.
In addition there are conversion costs of \$23,796, which bring the total cost to \$50,200.

The cost is spread over the expected output, which is 95% x 9,660 = 9177 kg.

(Questions like yours are best asked in the F2 Ask the ACCA Tutor Forum. This space is for comments on the lecture.)

So the cost per kg is 50,200/9,177 = \$5.47.

The output is therefore valued at 9,130 x \$5.47 = \$49,941.

There is an abnormal loss of 9,177 – 9,130 = 47kg. So this is valued at 47 x \$5.47 = \$257.

3. says

Hello Sir,
I have a question on page 74 question 4, when we calculate the production in one period should be less opening stock and plus closing stock, right? I am confused in this question solution, why you calculate the joint cost, pulsing open stock \$40000 and lessing closing stock \$2000??

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The cost of production is always opening inventory, plus purchases, less closing inventory.
Here, instead of purchases we have the cost of materials and conversion costs.

4. says

please can anyone tell me how we got 0.6666 as the cost per unit of x in the test on joint product in question 1? thanks

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When P and Q left the process, the cost per unit for both of them is the joint cost (350,000) divided by the total production (750,000 units). This gives a cost per unit of 0.46666.

Q the has further work done (to turn it into X) at a cost of \$66,000 for production of 330,000 units, which means there is an extra cost of 66000/330000 = 0.2 per unit.

So…the total cost per unit for X is 0.46666 + 0.2 = 0.66666

5. says

Hi, is there a typo on page 78 question 4? Output and sales for product “Z” should be for product “Y”? I think I know the answer, but thought I should check.

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40% in the answer is correct. (60% work was done last year on the opening work in progress – only 40% work is therefore done this year)

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