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Dear Mr John,
Q1) Belachan operates a continuous process into which 3000 units of material costings $10000 were input during the period. Conversion costs were $10970, and loss are expected at a rate of 10% of input. These lossess can be sold for $1.50 per unit. there were no opening & closing inventory. Output for the period was 2900 units. What was the valuation of the output for the period? My answer is $22,040
Q2)
Process 1 :
Opening WIP: $3290
Material added : $10000
Conversion costs : $8350
Closing WIP :$ 9080Process 2:
Opening WIP : $2140
Material added : $17000
Conversion costs : $19700
Closing WIP : $2620What is the output pf process 1 going into process 2?
Q3) Draw LLP has 40reams of headed notepaper in inventory and 100 reams on order with suppliers. if free stock is 70reams, the number of reams of headed notepaper that have been requisitioned but not yet issue is ……? My answer is :70 reams.
Many Thanks !!!
Q1: Your answer is correct
Q2: 3290 + 10000 + 8350 – 9080 = $3560
Q3: Your answer is correct. (It is no longer called stock – it is inventory 🙂 )
Q2: 3290 + 10000 + 8350 – 9080 = $3560
Sir, please help me to double check.
If 3290+10000+8350-9080=$12560but i very confuse this question, it asking output of process 1 going into process 2, so the answer should find out output (unit), izit right?
Thanks.
Ooops, sorry – my addition was wrong.
The correct answer is $12560.
With the question as you have typed it, there is not enough information to calculate units. It can only be calculated in $’s.
Could you explain the Q3, please?
Q3) Draw LLP has 40 reams of headed notepaper in inventory and 100 reams on order with suppliers. if free stock is 70 reams, the number of reams of headed notepaper that have been requisitioned but not yet issue is ……?
Free inventory (we do not call it stock) is the amount that I can promise to customers.
We current have 40 and we have ordered another 100, which means we would be able to promise 140 to customers. However, it we have already promised some already (requisitioned but not yet issued) then to number we can promise to new customers will be less.
Since it tells us that the free inventory is 70, it means that we can only promise 70 to new customers. That must mean the we have already promised (requisition but not yet issued) 140 – 70 = 70 reams.
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