Process costing

steveJsteveJ Experienced MentorPosts: 694Registered
Hello all,

long time no see ...

just a quick one ...

im working on a question involving process costing and its asked me to calculate the number of units of abnormal loss or gain!

Whta information would i look at for this ?

Comments

  • crispycrispy Trusted Regular SouthamptonPosts: 454Registered
    Been a while since I did process costing but here is basic of what I can remember

    Just say you had 100kgs of material into process and there was a 10% normal loss and 80kgs output to the next process.

    Normal loss would be 100kgs * 10% = 10kgs (this I expect will have a nil value on the t-account), Output to next process would be 80Kgs and therefore an abnormal loss of 10Kgs. The T Account will have 100kgs input on Dr side, and Normal Loss 10Kgs, Output 80Kgs and Abnormal Loss 10Kgs on Cr side. As with the £ Value, the Kg (or whatever the input is) should balance on both sides of the process account.

    Sorry that this is only a very basic outline, - is this for cima P1 ? If so I believe on the pilot paper there is good process costing question that if you can master you should be ok with any of this type question.
  • steveJsteveJ Experienced Mentor Posts: 694Registered
    Thanks for replying crispy.

    No, im studying Costs and revenues.

    Its asking for equivalent cost per unit for Materials, labour and overheads??
    and also the value of work-in-progress!!
    I thinks its probably just wording that has thrown me off aswell as the layout of the question

    Any ehlp would be great

    Im really trying to get my head around this :s
  • crispycrispy Trusted Regular SouthamptonPosts: 454Registered
    OK equivalent costs and closing WIP, not quite so straight forward - Ill have to get back to you :P
  • dave13dave13 New Member Posts: 9Registered
    Hi,
    In the E learning zone/green light tests > level 3 > costs and revenues> learning zone, there are two step by step guides on equivalent units and process costing which I have found very useful.
    I am sitting this exam tomorrow.
    Good luck!
  • MarkTMarkT Trusted Regular Posts: 302Registered
    steveJ wrote: »
    Thanks for replying crispy.

    No, im studying Costs and revenues.

    Its asking for equivalent cost per unit for Materials, labour and overheads??
    and also the value of work-in-progress!!
    I thinks its probably just wording that has thrown me off aswell as the layout of the question

    Any ehlp would be great

    Im really trying to get my head around this :s

    The equivalent cost per unit is worked out on the Output

    Say for example you produced 100 units of product x

    Materials cost £1200
    Labour Cost £800
    Overheads £500

    Equivalent unit cost (be careful if it asks for Absorbed cost or Marginal cost)

    Absorbed £25 per unit
    Marginal Cost £20 per unit

    WIP usually gives you a percentage of what it considers complete as per labour, material and overheads etc
  • crispycrispy Trusted Regular SouthamptonPosts: 454Registered
    Hello,

    I have attached (or think I have) a simple style example to process costing with closing WIP.Hopefully this is ok and you can understand. Apologies for any errors, not done this for a while but hopefully my overall technique was sound, Mark has explained the process above.
  • MarkTMarkT Trusted Regular Posts: 302Registered
    crispy wrote: »
    Hello,

    I have attached (or think I have) a simple style example to process costing with closing WIP.Hopefully this is ok and you can understand. Apologies for any errors, not done this for a while but hopefully my overall technique was sound, Mark has explained the process above.

    wowser..

    Where did you get this from? That looks pretty ok for the most part, but the AAT CBA papers so far have not amalgamated wip into the process cost account.

    IF they do, then thanks - that just gave me a heads up of what to expect next month in the exam :thumbup:
  • steveJsteveJ Experienced Mentor Posts: 694Registered
    Cheers everyone ...

    I passed that practice exam !! wahooo ...

    Thanks again
  • MarkTMarkT Trusted Regular Posts: 302Registered
    steveJ wrote: »
    Cheers everyone ...

    I passed that practice exam !! wahooo ...

    Thanks again
    Well done, its not so bad...

    I have the CRS exam in the morning and am currently cramming for it by cramming on limiting factors - good luck for yours, when is it?
  • KaySarahKaySarah Well-Known Posts: 215Registered
    MarkT wrote: »
    wowser..

    Where did you get this from? That looks pretty ok for the most part, but the AAT CBA papers so far have not amalgamated wip into the process cost account.

    IF they do, then thanks - that just gave me a heads up of what to expect next month in the exam :thumbup:

    Hi Mark

    Sandy taught us WIP as part of our process costing ... and it proved very useful in the exam :001_smile:

    The VERY BEST OF LUCK FOR THIS MORNING :001_smile:
  • MarkTMarkT Trusted Regular Posts: 302Registered
    KaySarah wrote: »
    Hi Mark

    Sandy taught us WIP as part of our process costing ... and it proved very useful in the exam :001_smile:

    The VERY BEST OF LUCK FOR THIS MORNING :001_smile:

    I passed... how, I don't know, that was one tough cookie :001_smile:
  • janwaljanwal Experienced Mentor Posts: 1,189Registered
    Hi Mark

    Congratulations on passing, I had no doubt you would. The only thing is if you found it hard, I don't stand a chance :sad:
  • KaySarahKaySarah Well-Known Posts: 215Registered
    janwal wrote: »
    Hi Mark

    Congratulations on passing, I had no doubt you would. The only thing is if you found it hard, I don't stand a chance :sad:

    CONGRATULATIONS Mark! A Well earned Pass of which we had no doubt whatsoever lol.

    Jan .. believe in yourself. I passed it and so will you. Make sure you revise each concept thoroughly and you'll be ok. The very best of Luck for yours.

    Kay
  • MarkTMarkT Trusted Regular Posts: 302Registered
    janwal wrote: »
    Hi Mark

    Congratulations on passing, I had no doubt you would. The only thing is if you found it hard, I don't stand a chance :sad:

    Hi Jan,

    I thought it was tough, but just got my full transcript - 8 E's, one M and a D... Lets not talk about the D :lol:

    The tough part was to not freak out too much as they worded it differently - the rest as long as you've understood the formulae should fall into place. My class are pretty good at this and they all came out saying it was tough - have faith - I know, its easy to say once you've done it yourself :001_smile:
  • MarkTMarkT Trusted Regular Posts: 302Registered
    KaySarah wrote: »
    CONGRATULATIONS Mark! A Well earned Pass of which we had no doubt whatsoever lol.

    Jan .. believe in yourself. I passed it and so will you. Make sure you revise each concept thoroughly and you'll be ok. The very best of Luck for yours.

    Kay

    Thanks Kay :001_smile:
  • steveJsteveJ Experienced Mentor Posts: 694Registered
    Nice one Mark:thumbup1:
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