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The following in4 is available for identifying the relavent cost of materials for a job to a customer.
MATERIAL: W X Y Z
TOTAL QTY REQ KG 500 500 500 100
CURRENTLY IN INVENTORY kg 0 300 400 100
CARRYING VALUE PER KG$ – 5 8 10
REALISABLE VALUE PER KG$ – 3 9 12
REPLACEMENT COST PER KG$ 8 7 11 15material Y is in regular use by company. materials x and z are no longer in use. there is no alternatives use for material X but the 100kg of material z can be used instead of 150kg of material Von a different job. Material V costs 9 per kg and there is currently none of this material in inventory
What is the relevant cost of these job under consideration?
You found this question in the BPP Revision Kit.
In which case you also have the answer!!Don’t just set me a question. Ask which bit of the answer you do not understand.
I am guessing you have problems with material X. BPP have a mistake in their answer. X should be valued at (300 x $3) + (200 x $7)
ohh yah! because my answer and the answer in the book did not match.
i was confused with the theory.
i have a knowledge of relavant costing but this question i dont get it sirmy answer:
500*8 =4000
300*3+200*7=2700all this is okay
next they say material Y is regular use by the company so shud we take the replacement cost fully for 500 for this or should we use the inventories in hand and den take 100 * replacement cost.i am confuse for the material Z and material V.
Please if you can be kind enough to explain thisIf material is in regular use then you should use the replacement cost for all of it. (Even the material currently in inventory will need replacing because it is in regular use)
For material Z, if we did not need it for the contract then we could either sell it (and get 100 x $12 = $1200) or we could use it instead of having to buy material V and that would save us 150 x 9 = 1350). So we would prefer to use if instead of V.
So using Z in the contract will lose us the 1350 that we could otherwise have saved.
sir there is a material yield question
A mix of three materials produces 0.9 liters of a finished product, with 10% loss of input in the process. standard material costs are as follows per 0.9 liters of output.
Material
X: 0.5L @ $2 Per litre
Y: 0.4L @ $1.5 per litre
Z: 0.1L @ $4 Per litreDuring a control period 4000 litres of output were produced. these used 2810 liters of material X, 1910L of Y and 380L of Z
What is material yield variance?
my answer:
ACTUAL:
2550+2040+510=5100LITRES
5100+3060+2040=$10200STANDARD:
4000 * 1L= 4000Ltherefore
0.5/1*4000= 2000L
0.4/1*4000=1600L
0.1/1*4000=400L2000+1600+400=4000L
4000+2400+1600=$8000Therefore variance diff would be $8000-10200= 2200A
BUT APPARENTLY MY ANSWER IS WRONG.. dnt know whr i went wrong plz help out
Please start a new thread when it is a different topic. This has nothing to do with relevant costing!!
The actual output is 4,000 litres.
Since the standard input is 1 litre for output of 0.9 litres, the standard input for the actual output is 4,000 x 1/0.09 = 4,444 litresYou need to compare the actual input (at standard mix and standard cost) with the standard input of 4,444 litres (at standard mix and standard cost).
sir so den dt means im supposed to compare ds with 5100 and 4444? and what will be d rate of 4444?
Yes – compare the actual input of 5100 with the standard input for the actual production (4444).
I do not know what you mean by ‘what will be d rate’! As I wrote before you cost both out using standard mix (0.5; 0.4; 0.1) and standard cost.
(The free lecture on mix and yield might help you)
sir what exactly is capital employed?
is it the net assets – net liabilities
or capita plus reserves plus long term liabilities? ??Please starts a new thread when it is a new topic – this is nothing to do with relevant costing!
Capital employed is: equity (share capital + reserves) plus non-current liabilities.
(This is of course exactly the same figure as total assets minus current liabilities.)Hiiiii sirrr howw uu ? 🙂
Just needed to thankyou for all ur effort u have put in getting all of us through.. and the help always rendered to us!
But without ur help we wouldnt have understood a thing..
i really dont know how much il get.. and what i hve done in the paper..
but even if i do pass in such a small time of studying itl be due to u and ur team sir!Sorry for all the bugging always 😛 😛 lol
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