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Process Costing

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Process Costing

  • This topic has 1 reply, 2 voices, and was last updated 11 years ago by John Moffat.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • June 19, 2014 at 7:09 am #177158
    Miss NM
    Member
    • Topics: 12
    • Replies: 23
    • ☆

    A chemical is manufactured in two processes, x and y. Data for process Y for last month are as follows:

    Material transferred from process X – 2000 litres @ $4 per litre
    Conversion costs incurred – $12240
    Output transferred to finished goods – 1600 litres

    No losses occur in the process.

    Closing work in progress is fully complete for material nut is only 50% processed.

    What is the value of the closing work in progress?

    June 19, 2014 at 8:06 am #177168
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54700
    • ☆☆☆☆☆

    Material is fully complete and so is $4 per unit.

    Effective units for conversion costs:
    1600 are full complete, WIP is 50% complete so effective units – 400 x 50% = 200.
    Total effective units = 1600 + 200 = 1800.

    So cost per effective unit = 12240 / 1800 = 6.80.

    Value of WIP: materials 400 x $4; plus conversion costs 400 x 50% = $6.80

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