# Process Costing – Work-in-progress (part d) Tests

1. says

Dear John,

In question 8 and 9 , is there any relevance of statement ” Conversion Costs are incurred evenly thru the process ”

Thanks

2. says

One of great Lecture…I had a little problem in solving question 9 because i didn’t at first considered material commencement 100% ….but later i check and get the error…

3. says

Hello sir,
I don’t get the concept behind test 2. If you can please explain it to me.

• says

It is actually a budgeting question rather than a process costing question
(and I assume you have looked at the answer at the back of the course notes?)

To know how many kg of material we need, we need to know how many units we will be producing. Although we are selling 19,000 units, we only need to produce 18,000 because 1000 will come from inventory.

Now we know how many units we are producing, we know how much material we will need. At 8 kg a unit, we need 18,000 x 8 = 144,000 kg.

However, not only do we need 144,000 kg to be able to produce the units, but we also want to increase in inventory by 3,000 kg. So we will need to buy 147,000 kg.

Hope that helps

4. says

I do Understand when you’re explaining but however I’m not able to do the questions. like applying my knowledge to the question. Can you help me solve this problem please?

• says

All I can suggest is that you watch the lecture again and that you practice more and more questions.
If you have problems with any specific questions then post your problem on here and I will try and help.

5. says

Hi Mr Moffat,
Can you please explain test question 2, Why its B (147,000) and not A (141,000)?

I worked out up to 18000 units at \$8 = \$1144,000 then add opening less closing stock. I know there is a logic not getting in my head. Please help.

Thanks

MS,

• says

Hi Mr Moffat,
I got it, i don’t why but some how i kept treating opening as closing.

Not a very good excuse but i got to keep my eyes wide open.

Thanks anyways.

MVS

6. says

hello John , i have a question for question 9 why did u take 30% of closing inventory which was complete and not 70% , because for opening inventory u took 40% which was incomplete plz explain i am going crazy over this question =(

• says

We are trying to calculate how much work was done during the period.

Because the opening inventory was already 60% complete, only the remaining 40% was done during the period in question.
The closing inventory was only started during the period, and only the first 30% of the work was done during the period (the other 70% will be done in the next period)

• says

ohhh ok i was just following the rule that in FIFO u always take incomplete percent of units and work on that maybe that’s why i was not getting my answer right

• says

But that is not the rule for FIFO.

You take the incomplete % of the opening WIP, and the completed % of the closing WIP.

7. says

waoooooooooooooooooo! I guessed for Q8 and Q9 and had both answers correct. Oh God please maintain this perfect guessing of mine at the exams. hahahahahahah

8. says

This is totally offtrack, but Mr.John! You are simply incredible!!! I learnt consolidation from OT and hence scored 98 in F3, I learnt variances too from here and scored 90 in F2.. I wish I had referred to your lectures for F5 as well… If I had I surely would’ve scored more than 83 ( thats what I could score ).. I wanted to know if you teach any other papers as well!
You are Godsent! Thanks a ton! 😀

• says

Question 4:

Of the 2000 that were finished, 300 were WIP at the start and then the remaining 1700 were done in full in the month.

Because they are using FIFO, the first 300 cost \$1710 (already spent) + the cost of finishing them in the month which was 40% x 300 x \$10 = \$1200. So the cost of those 300 ended up as \$2910.

The other 1700 are all at the months price of \$10 which gives 17,000.

So the total is \$19,910.

• says

Question 9:

They are using FIFO, and so we need to calculate how many units were started and finished this month. Since 14,000 were completed, but 2000 of them had already been started, that means that 12,000 must have been done in full this month.

Materials: the opening WIP was already finished for materials. The 12,000 done this month had full materials cost. The 3,000 closing WIP had full materials work done this month. So….for materials 15,000 equivalent units.
So the materials cost per unit = 51,000 / 15,000 = £3.40

Conversion costs: the opening WIP was already 60% finished, so this month the remaining 40%. So 40% x 2,000 = 800 equivalent units.
Another 12,000 done in full this month (as above)
The closing WIP had 30% work done this month. So 30% x 3,000 = 900 equivalent units.
So the total equivalent units for conversion costs = 800 + 12,000 + 900 = 13,700.
The total cost this month was \$193,170. So the cost per equivalent units is \$193,170 / 13,700 = \$14.10 p.u.

The value of the closing WIP:
Materials: 3,000 x 100% work x \$3.40 p.u. = \$10,200
Conv. costs: 3,000 x 30% work done x \$14.10 = \$12,690

So the total value of the closing WIP = 10,200 + 12,690 = \$22,890

• says

But with regards to the opening work in progress, the degree of completion was used to judge how much of it was material input. So shouldn’t the amount of conversion cost left for the closing work in progress be 100% – 30% = 70%?
which leads to 2100 equivalent units for conversion costs?

• says

The degree of completion was not used to judge how much of it was material input.
The question says ‘all materials are input at the commencement’ (which is usually the case in the exam) and so the %’s only relate to the conversion costs.

So the opening WIP was already 60% complete, leaving only 40% work to do this period.
The closing WIP was 30% complete, so 30% work must have been done this period.

• says

Oh I see, it’s the closing WIP so there will be more conversion needed in the following period. Alright, thanks for the clarification Mr Moffat!

• says

@allamardneket4, the question clearly says labor and oh for part finished is valued at\$2.50 so it comes to 4.5 +1.25 +2.5

9. says

please tell me anyone ,after pipfa how many examption for ACCA,,I Have don already M.COM and now pipfa inter,,,,,