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- This topic has 3 replies, 2 voices, and was last updated 1 year ago by John Moffat.
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- August 10, 2023 at 6:14 am #689650
Vare produces various inks at its Normanton factory. Production details for Process 1 are as follows: Opening work?in?progress, 1 April 400 units 60% complete Closing work?in?progress, 30 April 600 units 20% complete Units started 1,000 Units finished 800 The degree of completion quoted relates to labour and overhead costs. Three-quarters of the materials are added at the start of the process and the remaining quarter added when the process is 50% complete. The company uses the FIFO method of cost allocation. What are the equivalent units of production for materials in the period?
A 1,250
B 1,000
C 850
D 680
(correct answer on the kit is C 850)August 10, 2023 at 7:54 am #689659Given that the opening WIP was 60% complete (so more than 50%), they will already have all of the materials and so no new materials in this period.
During the period they started and completed 400 new units and so they have full materials.
They also started the closing WIP of 600 units. They are only 20% complete and so they only have 75% of the materials, so 75% x 600 = 450 effective units.
So the total number of effective units is 0 + 400 + 450 = 850
August 10, 2023 at 10:27 am #689670Thank You.
August 10, 2023 at 5:09 pm #689684You are welcome.
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