Question

Tutorial 3 Question 1 (24 Marks – 43 Minutes) Supp 2013 Nov Jonca CC manufactures a single product in a single process and uses a process costing system. The following information for March 2013 is available: Work in process - 1 March 2013 45 000 units - Material - 100% complete N$180 000 - Conversion costs - 60% complete N$78 750 Material issued for 186 000 units N$651 000 Conversion costs N$381 915 Units completed 160 500 units Work in process - 31 March 2013 27 000 units - Material - 100% complete - Conversion costs - 40% complete I. Material is added at the beginning of the process. Conversion costs are incurred evenly throughout the process. II. Normal spoilage is estimated at 10% of input. III. Losses occur when the process is 50% complete. Page 20 of 66 IV. The first-in-first-out (FIFO) method of inventory valuation is used. REQUIRED: Marks Prepare the following statements for March 2013: 1.1 Quantity statement (inclusive of equivalent units) 11 1.2 Production cost statement per unit 4 1.3 Cost allocation statement 9 TOTAL MARKS 24

Answer 1

1) Quantity statement (inclusive of equivalent units)

Opening work in progress 45,000   units

   Material issued    186 000 units

   Total units 2,31,000 units

​ equivalent units (FIFO)

Material Convertion cost

   completed units

​from Opening work in progress    ​45000 -- 18000 (40% complete)
from fresh units introduced    1,15,500 1,15,500 (100%)    1,15,500 (100% complete    closeing w.i.p 27,000 27,000 (100%) 10,800 (40% complete)    normal loss    (10% of input ) 18,600    --    --

Ab normal loss (balance)    24,900 12,450 (50%)   12,450 (50%)

        Total units 2,31,000 units 1,54,950 units 1,56,750 units

2)Production cost statement per unit

​   Cost per equivalent unit = Production cost incurred in process / Equivalent units

​    Material=6,51,000/1,54,950

​    =4.2per equvalent unit

​    convertion cost=3,81,915/1,56,750

​ =2.44 per equvalent unit

​3) Cost allocation statement

	calculation	Amount $
opening work in progrss including already amont incurred (1,80,000 78,750)	c.c=18,000*2.44	3,02,670
fresh units introduced in process	M=1,15,500*4.2 c.c=1,15,500*2.44	7,66.575
closeing work in progress	M=27,000*4.2 C.C=10,800*2.44	1,39,752
Ab normal loss (balance)	M=12,450*4.2 C.C=12,450*​2.44	82,668
TOTAL		12,91,665
M=material cost,c.c=convertion cost

note:

• while calculating point diffrence 345$ adjusted in completed units
• in FIFO method first completed units from opening work in progress units
• Normal loss considerd only for units, value is born by other units