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equivalent units

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › equivalent units

  • This topic has 1 reply, 2 voices, and was last updated 9 months ago by John Moffat.
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  • Author
    Posts
  • May 6, 2022 at 6:20 pm #655066
    kashafaltaf500
    Member
    • Topics: 19
    • Replies: 9
    • ☆

    The following information relates to questions 11.9 and 11.10.
    A company makes a product in two processes. The following data is available for the latest period,
    for process 1.
    Opening work in progress of 200 units was valued as follows.
    Material $2,400
    Labour $1,200
    Overhead $400
    No losses occur in the process.
    Units added and costs incurred during the period:
    Material $6,000 (500 units)
    Labour $3,350
    Overhead $1,490
    Closing work in progress of 100 units had reached the following degrees of completion:
    Material 100%
    Labour 50%
    Overhead 30%
    The company uses the weighted average method of inventory valuation.
    11.9 How many equivalent units are used when calculating the cost per unit in relation to overhead?
    A 500
    B 600
    C 630
    D 700

    11.10 What is the value of the units transferred to process 2?
    A $7,200
    B $13,200
    C $14,840
    D $15,400

    i dont understand how to do the 11.10?
    plz help

    May 7, 2022 at 9:24 am #655099
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51585
    • ☆☆☆☆☆

    You need to calculate the cost per equivalent unit for each of the materials, the labour, and the overheads. Adding them together gives the total cost for a finished unit.

    There are 600 units completed during the period, and therefore the value of the units transferred is 600 x the cost of a finished unit.

    This is all explained in detail in my free lectures on process costing. The lectures are a complete free course for Paper MA and cover everything needed to be able to pass the exam well.

    (I assume that the numbers of the questions that you quote are from an edition of the BPP Revision Kit and therefore you have the answer with workings in the Kit, although again I explain how to do this in my free lectures – it is a very standard process costing question.)

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