Process costing

This topic has 3 replies, 2 voices, and was last updated 11 years ago by John Moffat.

Viewing 4 posts - 1 through 4 (of 4 total)

Author

Posts
March 11, 2015 at 4:47 pm #232035
Zuzie
Participant
- Topics: 20
- Replies: 23
Good Day Sir

Please help with the following:
Materials input(2000 units): $4000
Labour: $3,120
Overheads:$1,120

Normal loss is 3% of input and losses sold at a scrap of $8 p/u. Actual loss is 80 units. There is no WIP. What is the value of the finished units

My answer:
units $
Input: 2,000 4,000
NL: (60) (480)
Total 1,940 3,840

AL (80) (640)
finished units=1,860 3,200

Is the value of $3,200 correct?

Thanks
Zuzie
March 11, 2015 at 7:31 pm #232062
John Moffat
Keymaster
- Topics: 57
- Replies: 54851
No – your answer is wrong.

Why have you ignored the labour and overheads?

The total cost is: 4,000 – 480 + 3,120 + 1,120 = 7,760

The units are 1940 (as you have)

So the cost per unit is 7760/1940 = $4

The finished units are 2,000 – 80 = 1,920.

So the cost of the finished units is 1,920 x $4 = $7,680

I do suggest that you watch the free lectures on process costing.
March 12, 2015 at 1:23 pm #232138
Zuzie
Participant
- Topics: 20
- Replies: 23
Hi John

I did watch the lectures but obviously need to go through them again!

Thank you for your help, ur the best 🙂
March 12, 2015 at 3:09 pm #232156
John Moffat
Keymaster
- Topics: 57
- Replies: 54851
You are welcome 🙂
Author

Posts

Viewing 4 posts - 1 through 4 (of 4 total)

You must be logged in to reply to this topic.