- May 24, 2020 at 9:41 am
Hi, sir Hope you are will.
I had doubt in process costing illustration in kaplan. Let me provide tge details of the illustration and my doubt thereafter
Question – The following details relate to process 2.
Material transferred from process 1 -) 1000 units at avg. Cost of usd 24 per unit
Labor cost = usd 9000
Overhead cost = usd 3000
Material transferred to process 3 = 800 units
Calculate avg. Cost per unit in process 2 and complete the process 2 account.
My doubt is that here input (1000) is not equal to output (800) unit. Hence i am a little confused here,
i tried this way.
Net costs of input = 24000 + 9000. + 3000 = 36,000 usd
Expected output = 800
So, Avg cost oer unit = 36000/ 1000 = 36 usd
But if it asks for process 3 , shoukd the expected output be 800 units?May 24, 2020 at 9:45 am
Oh, sorry i was not asking for process 3 . Simply i was confused how to deal with situation when input is not equal to output.
Should the expected output be 800 ? If materual transferred to process 3 is 800 units.May 24, 2020 at 12:18 pm
I do not have the Kaplan books – only the BPP Revision Kit.
However unless there is more detail given in the question (such as information about losses or about work-in-progress) then it would seem that the other 200 units remained in inventory in process 2. That would mean that the average cost per unit is 36,000 / 1,000.
Does the book not have an answer showing the workings?
Have you watched 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.
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