A company manufactures Chemical X, in a single process. At the start of the month there was no work-inprogress. During the month 300 litres of raw material were input into the process at a total cost of $6,000. Conversion costs during the month amounted to $4,500. At the end of the month 250 litres of Chemical X were transferred to finished goods inventory. The remaining work-in-progress was 100% complete with respect to materials and 50% complete with respect to conversion costs. There were no losses in the process and there is no scrap value available during months when losses occur.

What are the equivalent units for closing work-in-progress at the end of the month?

A company manufactures Chemical X, in a single process. At the start of the month there was no work-in-progress. During the month 300 litres of raw material were input into the process at a total cost of $6,000. Conversion costs during the month amounted to $4,500. At the end of the month 250 litres of Chemical X were transferred to finished goods inventory. The remaining work-in-progress was 100% complete with respect to materials and 50% complete with respect to conversion costs. There were no losses in the process and there is no scrap value available during months when losses occur.

If there had been a normal process loss of 10% of input during the month what would the value of this loss have been?

In a particular process, the input for the period was 2,000 units. There were no inventories at the beginning or end of the process. Normal loss is 5% of input. In which of the following circumstances is there an abnormal gain?

(i) Actual output = 1,800 units

(ii) Actual output = 1,950 units

(iii) Actual output = 2,000 units

In a process account, how are abnormal losses valued?

A company needs to produce 340 litres of Chemical X. There 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 company produces a certain food item in a manufacturing process. On 1 November, there was no opening inventory of work in process. During November, 500 units of material were input to the process, with a cost of $9,000. Direct labour costs in November were $3,840. Production overhead is absorbed at the rate of 200% of direct labour costs. Closing inventory on 30 November consisted of 100 units which were 100% complete as to materials and 80% complete as to labour and overhead. There was no loss in process.

What is the full production cost of completed units during November?

A company produces a certain food item in a manufacturing process. On 1 November, there was no opening inventory of work in process. During November, 500 units of material were input to the process, with a cost of $9,000. Direct labour costs in November were $3,840. Production overhead is absorbed at the rate of 200% of direct labour costs. Closing inventory on 30 November consisted of 100 units which were 100% complete as to materials and 80% complete as to labour and overhead. There was no loss in process.

What is the value of the closing work in progress on 30 November?

A company makes a product in two processes. The following data is available for the latest period, for process 1.

Opening work in progress of 200 units was valued as follows.

Material - $2,400

Labour - $1,200

Overhead - $400

No losses occur in the process.

Units added and costs incurred during the period:

Material - $6,000 (500 units)

Labour - $3,350

Overhead - $1,490

Closing work in progress of 100 units had reached the following degrees of completion:

Material - 100%

Labour - 50%

Overhead - 30%

The company uses the weighted average method of inventory valuation.

How many equivalent units are used when calculating the cost per unit in relation to overhead?

A company makes a product in two processes. The following data is available for the latest period, for process 1.

Opening work in progress of 200 units was valued as follows.

Material - $2,400

Labour - $1,200

Overhead - $400

No losses occur in the process.

Units added and costs incurred during the period:

Material - $6,000 (500 units)

Labour - $3,350

Overhead - $1,490

Closing work in progress of 100 units had reached the following degrees of completion:

Material - 100%

Labour - 50%

Overhead - 30%

The company uses the weighted average method of inventory valuation.

What is the value of the units transferred to process 2?

A company uses process costing to establish the cost per unit of its output.

The following information was available for the last month:

Input units- 10,000

Output units- 9,850

Opening inventory - 300 units, 100% complete for materials and 70% complete for conversion costs

Closing inventory - 450 units, 100% complete for materials and 30% complete for conversion costs

The company uses the weighted average method of valuing inventory.

What were the equivalent units for conversion costs?

A company uses process costing to value its output. The following was recorded for the period:

Input materials 2,000 units at $4.50 per unit

Conversion costs 13,340

Normal loss 5% of input valued at $3 per unit

Actual loss 150 units

There were no opening or closing inventories.

What was the valuation of one unit of output to one decimal place?

A company operates a continuous process into which 3,000 units of material costing $9,000 was input in a period. Conversion costs for this period were $11,970 and losses, which have a scrap value of $1.50, are expected at a rate of 10% of input. There were no opening or closing inventories and output for the period was 2,900 units.

What was the output valuation?

The following information relates to a company's polishing process for the previous period.

Output to finished goods 5,408 units valued at $29,744

Normal loss 276 units

Actual loss 112 units

All losses have a scrap value of $2.50 per unit and there was no opening or closing work in progress.

What was the value of the input during the period?

Which of the following statements about process losses are correct?

(i) Units of normal loss should be valued at full cost per unit

(ii) Units of abnormal loss should be valued at their scrap value

The following question is taken from the January to June 2015 exam period. Normally no losses are expected from a process.

Any abnormal losses are sold for scrap.

Which of the following calculates the net cost to the company of one unit of abnormal loss?

The following question is taken from the September to June 2018 exam period.

A process is subject to a normal loss of 12% of input. Losses can be sold for $5 per kg. In the last period 10,000 kg of material costing $100,000 was input to the process. Conversion costs for the period were $50,000 and output was 9,200 kg.

What is the credit to the statement of profit or loss from the abnormal gain account in the last period?

A company manufactures two joint products, P and R, in a common process. Data for June are as follows.

$

Opening inventory 1,000

Direct materials added 10,000

Conversion costs 12,000

Closing inventory 3,000

If costs are apportioned between joint products on a sales value basis, what was the cost per unit of product R in June?

A company manufactures two joint products, P and R, in a common process. Data for June are as follows.

$

Opening inventory 1,000

Direct materials added 10,000

Conversion costs 12,000

Closing inventory 3,000

If costs are apportioned between joint products on a physical unit basis, what was the total cost of product P production in June?    

Which of the following statements is/are correct?

(i) A by-product is a product produced at the same time as other products which has a relatively low volume compared with the other products

(ii) Since a by-product is a saleable item it should be separately costed in the process account, and should absorb some of the process costs

(iii) Costs incurred prior to the point of separation are known as common or joint costs

A company manufactures two joint products and one by-product in a single process. Data for November are as follows.

$

Raw material input 216,000

Conversion costs 72,000

There were no inventories at the beginning or end of the period.

By-product sales revenue is credited to the process account. Joint costs are apportioned on a sales value basis. What were the full production costs of product Q in November (to the nearest $)?

A company manufactures three joint products and one by-product from a single process.

Data for May are as follows.

Opening and closing inventories Nil

Raw materials input $180,000

Conversion costs $50,000

By-product sales revenue is credited to the sales account. Joint costs are apportioned on a sales value basis.

What were the full production costs of product M in May (to the nearest $)?

Two products G and H are created from a joint process. G can be sold immediately after split-off. H requires further processing before it is in a saleable condition. There are no opening inventories and no work in progress.

The following data are available for last period:

$

Total joint production costs 384,000

Further processing costs (product H) 159,600

Using the physical unit method for apportioning joint production costs, what was the cost value of the closing inventory of product H for last period?

Two products (W and X) are created from a joint process. Both products can be sold immediately after split-off. There are no opening inventories or work in progress.

Using the sales value method of apportioning joint production costs, what was the value of the closing inventory of product X for last period?

Two joint products A and B are produced in a process. Data for the process for the last period are as follows:

Product A B

Tonnes Tonnes

Sales 480 320

Production 600 400

Common production costs in the period were $12,000. There was no opening inventory. Both products had a gross profit margin of 40%. Common production costs were apportioned on a physical basis.

What was the gross profit for product A in the period?

A process produces two joint products A and B in equal physical quantities. A and B are sold at split off point for $5 per kg and $8 per kg respectively. There are no further costs after the split off point.

If joint costs are apportioned on a relative sales value basis, which of the following statements is true?

Which of the following is NOT an acceptable method of accounting for by-products?

In a period, a process produced 2,000 kg of a main product and 400 kg of a by-product. The cost of production was $5,000. 1,800 kg of the main product were sold at $10 per kg and all of the by product produced was sold for $1per kg. There was no opening inventory.

If the sales income of the by-product is deducted from the cost of production, what is the profit for the period?

Which of the following costing methods is most likely to be used by a company involved in the manufacture of liquid soap?

A company calculates the prices of jobs by adding overheads to the prime cost and adding 30% to total costs as a mark up. Job number Y256 was sold for $1,690 and incurred overheads of $694. What was the prime cost of the job?

A company operates a job costing system.

The estimated costs for job 173 are as follows.

Direct materials 5 metres @ $20 per metre

Direct labour 14 hours @ $8 per hour

Variable production overheads are recovered at the rate of $3 per direct labour hour.

Fixed production overheads for the year are budgeted to be $200,000 and are to be recovered on the basis of the total of 40,000 direct labour hours for the year.

Other overheads, in relation to selling, distribution and administration, are recovered at the rate of $80 per job.

What is the total cost of job 173?

A firm makes special assemblies to customers' orders and uses job costing.

The budgeted overheads for the period were $126,000.

Job number BB15 was completed on the last day of the period.

What overhead should be added to job number CC20 for the period?

A firm makes special assemblies to customers' orders and uses job costing.

The budgeted overheads for the period were $126,000.

Job number BB15 was completed on the last day of the period.

What was the approximate value of closing work-in-progress at the end of the period?

The following items may be used in costing batches.

(i) Actual material cost

(ii) Actual manufacturing overheads

(iii) Absorbed manufacturing overheads

(iv) Actual labour cost Which of the above are contained in a typical batch cost?

Which of the following would be appropriate cost units for a passenger coach company?

(i) Vehicle cost per passenger-kilometer

(ii) Fuel cost for each vehicle per kilometer

(iii) Fixed cost per kilometer

The following information is available for a hotel company for the latest thirty day period.

Number of rooms available per night 40

Percentage occupancy achieved 65%

Room servicing cost incurred $3,900

What was the room servicing cost per occupied room-night last period, to the nearest cent?

Annie is to set up a small hairdressing business at home. She anticipates working a 35-hour week and taking four weeks' holiday per year. Her expenses for materials and overheads are expected to be $3,000 per year, and she has set herself a target profit of $18,000 for the first year.

Assuming that only 90% of her working time will be chargeable to clients, what price should she charge for a 'color and cut' which would take 3 hours?

Which of the following are likely to use service costing?

(i) A college

(ii) A hotel

(iii) A plumber

Which of the following would be considered a service industry?

(i) An airline company

(ii) A railway company

(iii) A firm of accountants

The following information relates to a management consultancy organisation:

$

Salary cost per hour for senior consultants 40

Salary cost per hour for junior consultants 25

Overhead absorption rate per hour applied to all hours 20

The organisation adds 40% to total cost to arrive at the final fee to be charged to a client.

Assignment number 789 took 54 hours of a senior consultant's time and 110 hours of junior consultants' time.

What is the final fee to be charged for Assignment 789?

A company operates a job costing system. Job number 1012 requires $45 of direct materials and $30 of direct labour. Direct labour is paid at the rate of $7.50 per hour. Production overheads are absorbed at a rate of $12.50 per direct labour hour and non-production overheads are absorbed at a rate of 60% of prime cost. What is the total cost of job number 1012?

Last year, Bryan Air carried excess baggage of 250,000 kg over a distance of 7,500 km at a cost of $3,750,000 for the extra fuel.

What is the cost per kg-km?

A truck delivered sand to two customers in a week.

The truck cost $3,060 to operate in the week. Each customer delivery was carried out separately, and the truck made no other deliveries in the week.

What is the cost per kilogram/kilometer of sand delivered in the week (to the nearest $0.001)?

A product is in the stage of its life cycle which is typified by falling prices but good profit margins due to high sales volumes.

What stage is it in?

How is target cost calculated?

Which stage of the product life cycle do the following characteristics refer to?

New competitors

Customer feedback received

New distribution outlets being found

Product quality improvements made

A new product is being developed. The development will take one year and the product is expected to have a life cycle of two years before it is replaced.

Which of the following statements are true of life cycle costing?

Statement 1: It is useful for assessing whether new products have been successful.

Statement 2: The individual profitability for products is less accurate.

A chain of coffee shops has implemented a Total Quality Management system to ensure high quality and consistency across all outlets. As part of the scheme, the chain offers a free replacement drink to any customer not completely satisfied with their purchase.

Which of the following BEST describes the cost of providing replacement drinks?

Which costing method is based around a calculation involving a desired profit margin and a competitive market price?