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John Moffat.
John Moffat.-
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kashafaltaf500
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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 70011.10 What is the value of the units transferred to process 2?
A $7,200
B $13,200
C $14,840
D $15,400i dont understand how to do the 11.10?
plz help
John Moffat
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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.)
kashafaltaf500
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