Exam 4: Process Costing, and Capital Investment Appraisal

Which one of the following statements is true?

Which one of the following statements is false?

A process incurs total costs in October of £483,840. Total inputs of material to the process amounted to 6,000 units. At the end of October, 5,400 units of finished production had been completed at a cost of £453,600. At 31 October there were 600 units of work in progress with a cost of £30,240. There was no work in progress in the process at 1 October. What is the % completion of the closing work in progress in the process?

PJS Limited produces liquid industrial cleaners. At 1 December, work in progress consisted of 800 litres of product which were 75% complete with respect to materials and 60% complete with respect to labour and overhead. 8,000 litres of liquid industrial cleaner were produced during December and transferred to the finished goods store. At 31 December, work in progress consisted of 600 litres of product which were 40% complete with respect to materials and 30% complete with respect to labour and overhead. PJS uses the weighted average cost valuation method to value units of work in progress and finished goods. What were the equivalent units of material and conversion costs to be applied in determining the cost of finished goods and work in progress in December?

Which one of the following statements is false?

Selling normal losses from a process reduces costs on the process account.

Which one of the following statements is false?

XJC Limited makes and sells paints to the home decorating market. During October the company produced 4,810 litres of paint. Normal losses are expected to be 5% of input materials. These normal losses can be sold for 64 pence a litre. 5,000 litres of material were put into the paint-making process during October at a cost of £28,535. Conversion costs for the month were £12,000. What is the total cost of actual finished paint production for October?

TKC Limited operates a process costing system. At 1 June, work in progress (WIP) of 800 units was 50% complete with respect to materials, labour and overhead and had a cost of £16,800. 6,200 units of product were transferred to finished goods during June. At the end of the month, WIP consisted of 250 units of product which were 80% complete with respect to materials, labour and overhead. Costs incurred by the process during June were £268,800. TKC Limited uses the weighted average cost method when valuing closing work in progress and finished goods. What was the production cost of goods transferred to finished goods during June?

BKY Limited produces advanced lubricants. The company uses a process costing system to determine costs for work in progress and finished goods production. At 1 May, there were 250 litres of advanced lubricant work in progress with a value of £1,560. This opening work in progress was 80% complete with respect to all costs incurred in the advanced lubricant production process. During May, 3,000 litres of advanced lubricant were completed and transferred to finished goods. The cost per equivalent unit for costs incurred during May was £8. The company uses the first in first out method to allocate costs to finished goods and closing work in progress. What was the total production cost of the 3,000 units transferred to finished goods in May?

TTK Limited produces specialist paints for motor vehicle manufacturers. The company uses a process costing system to determine costs for work in progress and finished goods production. At 1 June, there were 5,000 litres of metallic blue paint work in progress with a value of £35,750. This opening work in progress was 65% complete with respect to all costs incurred in the metallic blue paint production process. During June, 25,000 litres of metallic blue paint were completed and transferred to finished goods. The cost per equivalent unit for costs incurred in June was £12. The company uses the weighted average cost method to allocate costs to finished goods and work in progress. What was the total production cost of the 25,000 units transferred to finished goods in June?

TDV Limited makes shower gels. In May, the shower gel production process used 20,000 litres of materials at a cost of £11,760 and incurred £3,822 of conversion costs. Normal losses from the shower gel production process are 2% of input materials and all waste products from the process are disposed of at a cost of 24.5 pence per litre. During May 19,700 litres of shower gel were produced. What is the production cost of the 19,700 litres of shower gel produced in May?

TFP Limited operates a process costing system and uses the first in first out method when valuing closing work in progress and finished units of production. During the month of August, 31,300 equivalent units of material were used in the process. The 2,000 units of opening work in progress were 60% complete with respect to materials. At the end of August, work in progress consisted of 5,000 units which were 50% complete with respect to materials. How many units of production were started and completed during the month of August?

In August, JXZ Limited used 7,500 litres of input materials to produce 7,240 litres of body lotion at a cost of £18,900. Conversion costs for the process were £9,840. Waste products from the body lotion process are sold for 40 pence per litre. Normal losses from the body lotion-making process are expected to be 4% of input materials. What is the production cost of 7,240 litres of body lotion in August?

When waste products from processes are sold, the proceeds from the sale of both normal losses and abnormal losses are credited to the process account.

Which one of the following statements is not true?

PCJ Limited operates a process costing system. At the start of July, work in progress (WIP) of 500 units was 60% complete with respect to materials and had a cost of £1,150. 5,000 units of product were transferred to finished goods during July. At the end of July, WIP consisted of 600 units of product which were 50% complete with respect to materials. Materials costs incurred by the process during July were £20,050. PCJ Limited uses the first in first out (FIFO) method when valuing closing work in progress and finished goods. How much materials cost is included in the production cost of goods transferred to finished goods during July?

Which one of the following statements is false?

At 1 July, AFB Limited's oil refining process had 400 litres of work in progress valued at £8,930. This work in progress was 70% complete with respect to materials and 50% complete with respect to conversion costs. The cost of opening work in progress was made up of £5,978 of materials cost and £2,952 of conversion costs. During the month, 2,500 litres of material were added to the process at a cost of £52,460 for materials and £36,900 for conversion costs. Output from the oil refining process in June was 2,600 litres. Work in progress at 30 June consisted of 300 litres which were 40% complete with respect to materials and 20% complete with respect to conversion costs. AFB Limited uses the first in first out (FIFO) method to value work in progress (WIP) and finished units of output. What is the value of work in progress in the oil refining process at 30 June?

Whimper Chemicals Limited has started a new process producing silent explosives. During the month of April, 10,000 units of material were input to the process at a cost of £20,000. Labour costs incurred in the month were £11,600 and overheads added to the process totalled up to £6,032. Normal losses from the process are 2% of input materials. 9,100 units of finished production were transferred to finished goods stores during the month. At 30 April, there were 800 units of work in progress (WIP) which were 75% complete with respect to materials, labour and overhead. What is the cost per equivalent unit that will be used in valuing finished production, work in progress, abnormal gains and abnormal losses in the silent explosives process?