1. Profile photo of Chau says

    Sorry sir,

    About the question 4, refer to the wrong answer A: $3, the answer in the course note says “if you selected option A you aportioned costs on the basis of units sold”. I don’t understand how can we get that incorrect answer? I guess that we would incorrectly sum opening stock, direct material, conversion costs and closing stock together, then just simply divide the result ($240,000) by the total production units (80,000 u). Is that right?

    Sorry for annoying you with this useless question. I hope to hear from you soon.

    Thank you

    • Profile photo of John Moffat says

      I assume you mean the 75,000 joint cost apportioned to product X and product Y?

      The joint cost is 200,000 in total. It is apportioned on the basis of the sales value of the production. The total sales value of the production is 320,000 of which X is 120,000 (the workings for these figures are printed in the answer).
      So if X has sales value of 120,000 out of a total of 320,000, then the joint cost is apportioned on that basis i.e. 120,000/320,000 x 200,000 = 75,000

  2. avatar 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%?!

    Thank you in advance,

  3. avatar says

    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

    • Profile photo of John Moffat says

      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.

  4. avatar 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??
    Thank you very much for your explanation in advance.

    • Profile photo of John Moffat says

      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

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