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MA (F2) Mock Exam Question- Process Costing

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › MA (F2) Mock Exam Question- Process Costing

  • This topic has 2 replies, 2 voices, and was last updated 10 months ago by John Moffat.
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  • March 31, 2022 at 5:41 pm #652437
    jvowles
    Participant
    • Topics: 4
    • Replies: 0
    • ☆

    Hi John,

    A question from the Mock/Revision exam:

    ‘Process B had no opening stock. 13,500 units of raw material was transferred in at £4,50 per unit. Additional material at £1.25 per unit was added in the process. Labour and overheads were £6.25 per completed unit and £2.50 per unit incomplete.

    If 11,750 completed units were transferred out, what was the value of the closing WIP in process B?’

    The answer is saying that i should have valued the closing WIP= 1,750 * (£.4.50+£1.25+£2.50= £14,437

    My question is why do we not include the ‘Lab and Oheads £6.25 per unit complete’ in that calculation?

    April 1, 2022 at 7:30 am #652490
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51560
    • ☆☆☆☆☆

    By definition, the work-in-progress is not complete. $6.25 is the labour and overheads for completed units. For incomplete units the cost is only $2.50 as per the question.

    April 1, 2022 at 7:31 am #652491
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51560
    • ☆☆☆☆☆

    By definition, the work-in-progress is not complete. $6.25 is the labour and overheads for completed units. For incomplete units the cost is only $2.50 as per the question.

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