Question 9.RQ.1.13: Data for questions 1.13 and 1.14 PP Ltd makes one product, w...
PP Ltd makes one product, which passes through a single process. The details of the process for period 2 were as follows.
There were 400 units of opening work in progress, valued as follows:
Material £49,000
Labour £23,000
Production overheads £3,800
No losses are expected in the process.
During the period, 900 units were added to the process, and the following costs occurred:
Material £98,000 (900 units)
Labour £139,500
Production overheads £79,200
There were 500 units of closing work in progress, which were 100 per cent complete for material, 90 per cent complete for labour and 40 per cent complete for overheads. No losses were incurred in the process.
PP Ltd uses weighted average costing.
1.13 How many equivalent units are used when calculating the cost per unit in relation to labour?
(A) 450
(B) 850
(C) 1,250
(D) 1,300
1.14 The value of completed output for the period was
(A) £ 171,555
(B) £ 201,500
(C) £ 274,488
(D) £ 322,400
1.13 : (C)
Workings are shown as part of solution 1.14.
1.14 : (D)
Equivalent units table
| Materials | Labour | Production o/h | ||||||||||||
| Description | Units | % | EU | % | EU | % | EU | |||||||
| Output | 800 | 100 | 800 | 100 | 800 | 100 | 800 | |||||||
| Closing WIP | 500 | 100 | 500 | 90 | 450 | 40 | 200 | |||||||
| EU | 1,300 | 1,250 | 1,000 | |||||||||||
| £ | £ | £ | ||||||||||||
| Costs – Period | 198,000 | 139,500 | 79,200 | |||||||||||
| Opening WIP | 49,000 | 23,000 | 3,800 | |||||||||||
| Total cost | 247,000 | 162,500 | 83,000 | |||||||||||
| Cost per equivalent unit | 190 | 130 | 83 | |||||||||||
Value of completed output = 800 × ( £ 190 + £ 130 + £ 83) = £322,400