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Hi sir, hope you are well.
My question is –
Blt manufactures chemicals and has the normal loss of 15% of material input information for February is as follow:
Material infut 200 kg costing $4.93 per kg
Labour and overhead $4,100
Transfers to finished goods 160kg
Losses are identified when process is 40% completeThere is no opening and closing wip.
Requires – Prepare the process account for february.
First thing i want to ask, This is a kaplan illustrtration is this kind of questiom comes in exam. if yes it it a two mark question. Is it possible that all owip, cwip, abnormal loss/gain question come as a single question. That would be lenthy.
Now, .my doubt with tge question was with tge rocess account normal loss allocation. In illustration solution the process account is like this.
PROCESS A/C
Particulars. Kg. $ particulars. Kg. $
Conversion(must be material) 200. 986 normal loss. 30. –
Labour and overheads. 4100. Finished goods 160. 4928
Abnormal loss. 10. 158In all early questions normal loss value was always there in credit side but in this question the normal loss units are resent but the value of normal loss is vanished.
The examiner has said that he will not ask question testing both losses and WIP in the same question.
Also, appreciate that you cannot be asked to write up any t-accounts in the exam.As far as the question you have typed out, there are 30 units on the credit side (15% x 200). There are no $’s showing because there is no mention of any scrap value – presumably the items are simply lost!
I do suggest that you watch 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.
So, Sir what will they exactly ask in chapters in which mostly we need to make t accounts. Like in process costing. I can guess only the WIP values, values transferred to next process and total scrap values or losses & gains transferred to stat of p&l due to abnormal loss or gains. ?
Yes – they can ask for any of the values, but cannot ask you to prepare a t-account.
I assume that you have a Revision Kit from one of the ACCA approved publishers (if not then it is essential that you buy one), in which case you will find lots of examples of how process costing can be examined.
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