Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Relevant Costing Example(BPP Question 20.9)
- This topic has 6 replies, 2 voices, and was last updated 7 years ago by MikeLittle.
- AuthorPosts
- August 29, 2016 at 6:19 am #335875
The following information is available for identifying the relevant cost of materials for a job for a customer.
The company’s management wants to establish a minimum price at which it is prepared to take on the job.
Material Total quantity
required
Currently in
inventory
Carrying value
per kg
Realisable value
per kg
Replacement
cost per kg
kg kg $ $ $
W 500 0 – – 8
X 500 300 5 3 7
Y 500 400 8 9 11
Z 100 100 10 12 15
Material Y is in regular use by the company. Materials X and Z are no longer in regular use. There is no
alternative use for Material X but the 100 kg of Material Z could be used instead of 150 kg of Material V on 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 materials for the job under consideration?
A $10,850
B $11,350
C $12,200
D $12,35020.9 D (Syllabus area B1(b))
$
Material W 500 kg × $8 =4,000
Material X 500 kg × $3 =1,500
Material Y 500 kg × $ =11 5,500
Material Z Higher of (100 × $12) and (150 × $9) =1,350
=12,350Hi Mike I am having trouble with the cost of X we have 300 in inventory and we need 500 for the special job,so i costed at 300 x NRV which is 3 and 200 with the replacement cost per kg but the kit has multiplied the 500 with 3(NRV)
Kindly clarifyAugust 29, 2016 at 7:19 am #335901Hmm – this is a tricky one! You’ve addressed this to me on the F7 Ask ACCA Tutor forum but when I look at the syllabus section B1 (b) this is what I find:
“Identify subsequent expenditure that may be capitalised, distinguishing between capital and revenue items.[2]”
Now, when I look at the F5 syllabus section B1 (b) this is what I find:
“Identify and calculate relevant costs for a specific decision situations from given data.[2]”
What do you reckon?
August 29, 2016 at 7:45 am #335904Really sorry Mike its F5 😛 Actually i have been posting a lot of question for F7 so force of habit.
August 29, 2016 at 8:05 am #335912No problem at all and good luck next week with both of F5 and F7
August 29, 2016 at 8:35 am #335922Should i repost it at f5?
August 29, 2016 at 8:37 am #335923Between its F5,F7 and F8 so yeah i need luck,although i do feel confident.
Will tell you how it pans outAugust 29, 2016 at 12:03 pm #335946“Should i repost it at f5?”
if you want an answer to it, then yes!
- AuthorPosts
- You must be logged in to reply to this topic.