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HANOI UNIVERSITY OF INDUSTRY ASSIGNMENT SHEET - LESSON 7
ACCOUNTING AND AUDITING MODULE: Management accounting (F2) DEPARTMENT DEPARTMENT OF ACCOUNTING INFORMATION SYSTEMS I. Multiple choice questions: The following information relates to questions 1 to 3 A chemical compound is made by raw material being processed through two processes. The output of Process A is passed to Process B where further material is added to the mix. The details of the process costs for the financial period number 10 were as shown below: Process A Direct material ( vật liệu trực tiếp) 2,000 kilograms at £5 per kg Direct labour ( nhân công trực tiếp) £7, Process plant time (xử lý tgian nhà máy) Process B 140 hours at £60 per hour Direct material 1,400 kilograms at £12 per kg Direct labour £4, Process plant time 80 hours at £72.50 per hour The departmental overhead for Period 10 was £6,840 and is absorbed into the costs of each process on direct labour cost. Process A Process B Expect output was 80% of input 90% of input Actual output was 1,400 kgs 2,620 kgs Assume no finished stock at the beginning of the period and no work-in-progress at either the beginning or the end of the period. Normal loss is contaminated material which is sold as scrap for £0.50 per kg from Process A and £1.825 per kg from Process B, for both of which immediate payment is received.
Q1. For process A what is the scrap value of the normal loss? a. £200 = Scap value = nomal loss (materials) x sold as scap= 20%20000. b. £2, c. £1, d. £ Q2. What is the abnormal loss for process A in units? a. 100 b. 200 = 1,600- 1,400 = 80%2,000 – 1, c. 300 d. 400 Q3. What is the cost per kg for process A? a. £18. b. £13. c. £14. d. £16. Cost per kg= (total cost- scap value of normal loss) / expected output = ( 29,920-200)/ ( 2000 80%) = 18. Total cost = ( D.M + D.L + Process plan time + OH) = ( 2,0005 + 7,200 + 140 hours 60 per hour + 4,320)= 29, Q4. In a process account, abnormal losses are valued: a. At their scrap value b. The same as good production c. At the cost of raw materials d. At good production cost less scrap value Q5. A company needs to produce 340 litres of Chemical X. This is a normal loss of 10% of the material input into the process. During a given month the company did produce 340 litres of Good production, although there was an abnormal loss of 5% of the material input into the process. How many litres of material were input into the process during the month? a. 357 litres b. 374 litres
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Question 1 2 3 4 5 6 7 8 9 10 Answer II. THE PRACTICE EXERCISES Exercise 1: JJ has a factory which operates two production processes, cutting and pasting. Normal loss in each process is 10%. Scrapped units out of the cutting process sell for $3 per unit whereas scrapped units out of the pasting process sell for $5. Output from the cutting process is transferred to the pasting process: output from the pasting process is finished output ready for sale. Relevant information about costs for control period 7 are as follows. Cutting process Pasting process Input materials 18,000 Units $ 54, Transferred to pasting process 16,000 Unit Materials from cutting process 16,000 units Added materials 14,000 units $70, Labour and overheads $32,400 $135, 0 Output to finished goods 28,000 units Task 1: Using the information above, prepare accounts for the cutting proces s Determine output and losses Actual output (units) Abnormal loss (units) Expected output (units) Calculate cost per unit of output and losses
Normal loss ($) Abnormal loss ($) Total scrap ($) Total cost Number of units Cost per expected unit of output ($) Materials Less normal loss scrap value Labour and overhead Total Calculate total cost of output and losses Output Normal loss Abnormal loss Task 2: Using the information above, prepare accounts for the pasting process Determine output and losses Actual output (units) Abnormal gain (units) Expected output (units) Calculate cost per unit of output and losses Normal loss scrap value ($) Abnormal gain scrap value ($) Scrap value of actual loss ($)
Output Equivalent units Materials Labour Overheads Finished units (balance)
Closing inventory
Equivalent 500 500 480 480 Calculate the cost per equivalent unit Cost ($) Equivalent units cost per unit Materials 9000 500 18=9000/ Labour 3840 480 8= 3840/ overhead 7680= 200%*
Labour and overhead 11,520 480 24 Total cóst/unit 42 Task 2 : Calculate the full production cost of completed units during November and the value of the closing work in progress on 30 November Cost element Number of equivalent units Cost per equivalent unit ($) Total ($) Finished goods
Work in progress: Materials 100 18 1,800= 100* Labour 80 8 640=80* Overhead 80 16 1,280=80*
