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I don't understand answer in this question.

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › I don't understand answer in this question.

  • This topic has 3 replies, 3 voices, and was last updated 2 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • September 29, 2019 at 8:56 pm #547639
    ivie2019
    Member
    • Topics: 8
    • Replies: 4
    • ☆

    Hi, John 🙂
    I am studying process costing at the moment,- and honestly I am finding it very difficult. I have watched your videos, watched also LSBF videos and still I cant get my head around it and every time making it wrong.
    THis was the question :

    A company manufactures Chemical X, in a single process. At the start of the month there was no work-inprogress. During the month 300 litres of raw material were input into the process at a total cost of $6,000. Conversion costs during the month amounted to $4,500. At the end of the month 250 litres of Chemical X were transferred to finished goods inventory. The remaining work-in-progress was 100% complete with respect to materials and 50% complete with respect to conversion costs. There were no losses in the process and there is no scrap value available during months when losses occur.

    What are the equivalent units for closing work-in-progress at the end of the month?

    Answer is : 50 litres material and and 25 litres conversion costs (equivalent liters).
    I understand the part of 50 litres material because 100% material used…

    BUT what does it even mean 50% conversion costs = 25 litres??
    what is the formula to get 25?
    How does it even works out ? what does it even means when conversion costs are 4500 and 50 litres are in progress and then 50% used for wip and get from somewhere 25 lotres?? Thank you ,,,

    September 30, 2019 at 8:02 am #547659
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54674
    • ☆☆☆☆☆

    There are 50 litres of work in progress.

    They have are only 50% finished in respect of conversion costs, so only 50% of the work has been done on these 50 litres.
    Doing 50% work on 50 litres will cost the same in total as doing the full work on 50% x 50 = 25 litres.

    May 19, 2023 at 9:17 pm #684697
    prekshagudhka
    Participant
    • Topics: 0
    • Replies: 1
    • ☆

    A company manufactures Chemical X, in a single process. At the start of the month there was no work in progress. During the month 300 litres of raw material were input into the process at a total cost of $6,000. Conversion costs during the month amounted to $4,500. At the end of the month 250 litres of Chemical X were transferred to finished goods inventory. The remaining work in progress was 100% complete with respect to materials and 50% complete with respect to conversion costs. There were no losses in the process.
    If there had been a normal process loss of 10% of input during the month what would the value of this loss have been?

    May 20, 2023 at 10:15 am #684716
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54674
    • ☆☆☆☆☆

    There is no point in simply typing out a full question and expecting to be provided with a full answer. You must have an answer in the same book in which you found the question, so ask about whatever it is in the answer that you are not clear about and then I will explain.

    I do assume that you have watched my free lectures on process costing?

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