MFAC6211 LU6 - PAQ Quiz

Normal Losses are Controllable

• True

• False

Answer explanation

Normal losses are uncontrollable losses. They exist due to the nature of the business.

An example of an abnormal loss that Jojo Juice (Pty) Ltd may be experience is wastage of raw materials due to employee carelessness.

• True

• False

As opening stock was 40% complete, it would not be affected by the wastage point.

• True

• False

Answer explanation

Opening was 40% complete at start of the process and would then reach 100% completion, it crosses the inspection point at 50%

Closing stock would not be affected by the wastage point.

• True

• False

Answer explanation

Closing WIP ended at 60%.

From 0% to 60% it therefore crosses the evaporation point.

Normal loss units at 50% evaporation are:

• 6559

• 6501

• 6500

• 6499.32

Answer explanation

130 000 x 5% = 6 500 units

Q3 (Production Cost Statement) Average Cost per Unit for Conversion:

• 88.3

• 8.83

• 8.38

• 7.38

Answer explanation

Q3 Rand Value of Normal Loss

• 65300

• 65252

• 65182

• 65225

Answer explanation

The "Closing WIP Section" in the cost allocation statement will include a value for Normal Loss.

• True

• False

Answer explanation

Closing wip did cross the evaporation point.

Happy (Pty) Ltd was the easier PAQ

• Yes

• No

• Depends

Answer explanation

It depends on how comfortable you are with process costing

You were required to prepare the cost allocation statement for Happy Pty Ltd

• False

• True