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December 22, 2016 at 5:50 pm #364259
ryan32
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OT,page number 72. Chapter 12.

A company operates a process costing system using the FIFO method of valuation. No losses occur in the process , All materials are input at the commencement of the process. Conversation costs are incurred evenly thought the process.

the following data relate to last period:

Units Degree of completion
Opening WIP 2000 60%
Total number of units completed 14000
Closing work in progress 3,000 30%

cost arising :
Materials 51,000
Conversion 193170

1. What was the total number of units input during last period?
why answer says 15000

The material required is 800 for op WIP remaining work
12000 for completed units apart from 2000 op. wip
and 900 for closing WIP 30% completed

so isn’t that shld be 13700 units of material put into process
December 22, 2016 at 6:33 pm #364263
John Moffat
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This is all explained in the free lectures that go with this chapter.

There is no point in using the lecture notes if you are not watching the lectures. In that case you need to study from a Study Text from one of the ACCA approved publishers.
December 22, 2016 at 8:42 pm #364272
ryan32
- Topics: 35
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sorry sir i have mistaken in writing
this question i picked not from study text but from F2 practise question set
this is question no 3 from ch 12

Question ask What was the total number of units input during last period?
answer says option c-15000

can u plz explain it

cause
The material required is 800 for op WIP remaining work
12000 for completed units apart from 2000 op. wip
and 900 for closing WIP 30% completed

so isn’t that should be 13700 units of material put into process
December 23, 2016 at 3:49 am #364281
ryan32
- Topics: 35
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another question i have that is
If in a process account (FIFO) there are opening WIP 2000 units which are 60% completed material wise. So we use equivalent units to value it.

In case it says at the end of period the output is 12000 completed units, no closing wip

so my question is how many units put into the process.

is it we will say 10000 units

or we will say it will be 10800
as op WIP is 60% complete material wise, so further units need to be put for completing other 40%- which is 800 units
and 10000 units which is completed.

please clear this out sir, this is only thing where i’m confusing at.
thank you
December 23, 2016 at 5:32 am #364282
ryan32
- Topics: 35
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what we will write under units of material input on the debit side of process account.

will it be as per EU 10800 or 10000?
December 23, 2016 at 7:46 am #364288
John Moffat
Keymaster
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But the pop-up answer to question 3 explained how the 15,000 is arrived at!

The question says that all materials are input at the start of the process, so the WIP is always 100% complete. It is only the conversion costs that are part complete.

For your second question, 10,000 units were started during the period. However for calculating the material cost per unit, the equivalent units are (40% x 2,000) + 10,000
December 23, 2016 at 1:11 pm #364324
ryan32
- Topics: 35
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i understand that
but there is a question in kaplan book Illustration.

op. WIP 400 units 40% complete
units started 1000
units finished 1400

The degree of completion quoted relates to labour and o/h cost. Three-quarters of the materials are added at the start of process and remaining quarter added when the process is 50% complete.Use FIFO method of cost allocation

so in this case they are saying until the process is 50% complete they won’t add the remaining quarter of material into the process.

So the Op. WIP units which is 40% complete, still need to get the remaining quarter of material to get it completed, apart from the material we need to put for 1000 units newly started.

So will there be exception in this case that the input material will be shown as
(150+1000) units

or it will be just 1000 units ignoring the remaining quarter of material is required for Op WIP.

and if it is shown as 1000 units then how do we account for that remaining quarter material 150 in Process A/c .
Or is it in this sense that the material input is enough to cover that material for Op WIP as well as to make 1000 new units and so its shown as 1000 units rather than 1150

Thank You.
December 23, 2016 at 10:25 pm #364359
John Moffat
Keymaster
- Topics: 57
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Why did you ask your previous questions and then say that you understand all that after I answer them???

The Kaplan question is completely different because the material is not always fully complete. The equivalent units for material is (25% x 400) + 1000.

You will not be asked to write up process accounts.
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