Question 9.RQ.1.8: A product is manufactured as a result of two processes, A an...
Data for questions 1.8–1.10
A product is manufactured as a result of two processes, A and B. Details of process B for the month of August were as follows:
Materials transferred from process A 10,000 kg valued at £ 40,500
Labour costs 1,000 hours @ £ 5.616 per hour
Overheads 50% of labour costs
Output transferred to finished goods 8,000 kg
Closing work in progress 900 kg
Normal loss is 10 per cent of input and losses do not have a scrap value.
Closing work in progress is 100 per cent complete for material, and 75 per cent complete for both labour and overheads.
1.8 What is the value of the abnormal loss (to the nearest £ )?
(A) Nil
(B) £ 489
(C) £ 544
(D) £ 546
1.9 What is the value of the output (to the nearest £ )?
(A) £ 39,139
(B) £ 43,488
(C) £ 43,680
(D) £ 43,977
1.10 What is the value of the closing work in progress (to the nearest £)?
(A) £ 4,403
(B) £ 4,698
(C) £ 4,892
(D) £ 4,947
| Materials Labour/overheads | ||||||||||
| Units | % | EU | % | EU | ||||||
| Output | 8,000 | 100 | 8,000 | 100 | 8,000 | |||||
| Normal loss | 1,000 | |||||||||
| Abnormal loss | 100 | 100 | 100 | 100 | 100 | |||||
| Closing work in progress | 900 | 100 | 900 | 75 | 675 | |||||
| Total equivalent units | 10,000 | 9,000 | 8,775 | |||||||
| Costs | £40,500 | £8,424 | ||||||||
| Equivalent unit cost | £4.50 | £0.96 | ||||||||
1.8 : (D)
Value of abnormal loss = 100 × ( £4.50 + £0.96) = £546.
1.9 : (C)
Value of output = 8,000 × ( £4.50 + £0.96) = £43,680.
1.10: (B)
Closing work in progress: £
900 × £4.50 4,050
675 × £0.96 648
4,689