Exam 4: Process Costing, and Capital Investment Appraisal

The disposal of normal losses from a process reduces the costs of that process.

VBT Limited produced 4,700 litres of power washer fluid in June. Normal losses are 6% of input materials. All losses have a disposal cost of £0.94 per litre. Materials for the month cost £18,800 while conversion costs were £11,750. There were no abnormal gains or losses in production of power washer fluid in June. What is the per litre cost of the finished production of power washer fluid in June?

The weighted average cost method of valuing finished production and closing work in progress takes no account of the equivalent units in opening work in progress.

JTS Limited operates a process in which there is opening and closing work in progress. At the start of June, opening work in progress consisted of 7,500 units which were 60% complete with respect to materials. 42,000 units of finished production were completed during June. At the end of the month, there were 8,000 units of work in progress which were 80% complete with respect to materials. What is the number of equivalent units of material added to the process during the month of June using the first in, first out method of valuing finished production and closing work in progress?

In February, 8,000 litres of material were input to a process at a cost of £18,432. Normal loss in the process is expected to be 4% of input materials. Process conversion costs for the month totalled up to £15,360. The process produced 7,560 litres of finished production in February. What were the values attributed to normal and abnormal losses in February?

Chuggles Limited makes soft drinks. During November, the company produced 30,000 litres of finished product. Opening work in progress at 1 November was 5,000 litres which were 65% complete with respect to materials. At 30 November, there were 4,000 litres of product which were 70% complete with respect to materials. Chuggles Limited uses the weighted average cost method to value finished goods and closing work in progress. What were the equivalent units of material used in the soft drinks process during November?

All inputs and outputs in the process account are valued in terms of both money and units.

In April, BFS Limited used 10,000 litres of input materials in its paint- making process. These materials cost £21,600. In addition, the paint- making process for the month consumed £14,400 of conversion costs. Normal losses in the paint-making process are 4% of input materials. 9,680 litres of paint were produced in April. What is the total cost of finished production of paint in April?

In September, STF Limited used 4,000 litres of material in its production of high strength sealant. Normal losses are 10% of input materials. All losses can be sold for £0.72 per litre. Materials for the month cost £34,560 while conversion costs were £16,128. 3,600 litres of high strength sealant were produced during September. What is the per litre cost of the finished production of high strength sealant in September?

TYN Limited produces adhesives. In July, 3,000 litres of material were used to produce 2,790 litres of super-strength glue. Materials costs for the month were £27,072 and labour and overheads added to the process amounted to £18,189. All losses from the process are sold for £2.35 per litre. Normal losses are 6% of input materials. What is the per litre cost of production for super-strength glue in July?

UTD Limited operates a process accounting system for its production of chemicals. During the month of January, Process Y used 6,000 litres of material at a cost of £38,880. Labour and overhead costs during the month were £19,440. Normal losses in the process are 10% of input materials. 5,400 litres of chemicals were produced from Process Y in January. What is the value per litre of finished production for the month of January?

Late N Tyle Limited makes treacle. At the start of November, there were 5,000 litres of work in progress which were 60% complete in respect of all inputs. Opening work in progress was valued at £2,000. During the month, 101,000 litres of treacle were produced. Materials for the month cost £61,250 and conversion costs for the month amounted to £10,910. At the end of November, there were 2,500 litres of work in progress which were 80% complete in respect of all inputs. Late N Tyle Limited uses the weighted average cost method to value work in progress and finished goods. What is the value of closing work in progress that Late N Tyle will record in the process account for November?

At 1 January, ACB Limited had 800 litres of solvent that were 80% complete with respect to all inputs of material, labour and overhead. This opening work in progress was valued at £4,200. During January, 12,000 litres of material were input to the process. Total costs for January for materials, labour and overhead amounted to £79,200. Normal loss from the process is 4% of input materials. During the month 11,320 litres of finished solvent were transferred to the next process. Work in progress at the end of the month amounted to 1,000 litres which were 32% complete with respect to materials, labour and overhead. There were no abnormal gains or losses in the process during January. ACB Limited values output and closing work in progress from its solvent process using the first in first out method of valuation. What is the value of closing work in progress at the end of January?

At 1 March, TFP Limited had 2,000 litres of liquid fertiliser that were 60% complete with respect to all inputs of material, labour and overhead. This opening work in progress (WIP) was valued at £5,692. During March, 20,000 litres of material were input to the process. Total costs for March for materials, labour and overhead amounted to £82,500. During the month 20,000 litres of liquid fertiliser were transferred to finished goods. Work in progress (WIP) at the end of the month amounted to 2,000 litres which were 40% complete with respect to materials, labour and overhead. TFP Limited values output and work in progress (WIP) from its liquid fertiliser process using the weighted average cost valuation method. What is the value of closing work in progress (WIP) using the weighted average cost method at the end of March?

TTD Limited produces specialist solvents. In June, 2,000 litres of material costing £44,100 were input to Process Sigma. Conversion costs for the month were £12,936. Normal losses from the process are 2% of input materials and the disposal cost for each litre of losses is £4.90. During June, 1,950 litres of finished product were produced from Process Sigma. What is the cost to be attributed to each unit of finished production, abnormal gains and abnormal losses in Process Sigma for June?

Process Delta produced 8,448 litres of finished production during November. There was an abnormal gain of 48 litres in the month and normal losses are expected to be 4% of input materials. How many litres of material were input into Process Delta during November?

SPM Limited produces paints. The company process costing system works on a first in first out basis in determining the costs of work in progress and finished goods production. At 1 June, there were 500 litres of work in progress with a value of £3,600. This opening work in progress was 75% complete with respect to all costs incurred in the paint production process. By the end of June, the total cost of paint transferred to finished goods was £49,850. The cost per equivalent litre of production for the month was £10 and there was no closing work in progress in the paint production process at 30 June. How many litres of paint were transferred to finished goods in June?

For2For Limited operates a process in which there is opening and closing work in progress. At the start of May, opening work in progress consisted of 4,000 units which were 75% complete with respect to materials. 36,000 units of finished production were completed during May. At the end of the month, there were 5,000 units of work in progress which were 80% complete with respect to materials. What is the number of equivalent units of material added to the process during the month of May using the first in, first out method of valuing finished production and closing work in progress?

Interest rates are 10%. What is the present value of £60,000 receivable in 6 years' time?

Gaseous Generation Limited produces gases for industrial use. In May, Process Gamma used 10,000 cubic metres of gas at a cost of £34,960. Waste gases generated by Process Gamma are expected to be 8% of input materials. Process Gamma conversion costs for May were £23,000. Waste gases from Process Gamma can be sold for 46 pence per cubic metre. Production in May was 9,000 cubic metres. What are the cost of finished production and the cost of abnormal losses that will be presented in the process account for Process Gamma for the month of May?