Process Costing

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donnas1977
donnas1977 Registered Posts: 182 Dedicated contributor 🦉
in AAT Level 3 (Level 6 in Scotland)
Hey

Got a query with process costing, we were asked to produce the process account for a period. Information given

Direct material = 720 @ £60 per tonne, Direct labour = 40 labour hrs @ £5.20, Overhead = £4.10 per direct labour hour. Normal loss is based on an allowance of 5% of input and waste has a saleable value of £1 per tonne. Output for period was 675 tones.

My calculations were as follows

materials 720 £43200
labour £208
overhead £164


720 £43572

normal lose 36 £36
output 675 £42963
abnormal lose 9 £573


720 £43572

However looking at the book they get the answers as

materials 720 £2400
labour £208
overhead £164

720 £2772

normal lose 36 £36
output 675 £2700
abnormal lose 9 £36


720 £2772


Normal costs of production
2772 – 36 = 2736
720-36 684 £ 4 per tonne

What my question is how to they get the 2400 figure? I thought your materials cost would be 720 x 60 per tonne. Looking at their book i know how they calculate the £4 per tonne but confused how they got the 2,400 figure. Am i missing something?

thanks

Donna

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  • janwal
    janwal Registered Posts: 1,189 Beyond epic contributor 🧙‍♂️
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    Hi Donna

    Are you using Kaplan books, if so check the book is right as I am dong level 2 and we have found a lot of mistakes in the book!

    Janet
  • donnas1977
    donnas1977 Registered Posts: 182 Dedicated contributor 🦉
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    yep its kaplan, the fig of 2400 doesn't look right to me. i have found a few other errors in activities that we have pointed out to the tutor.
  • janwal
    janwal Registered Posts: 1,189 Beyond epic contributor 🧙‍♂️
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    Hi Donna

    Could be wrong but I think they've done what they did in one of ours and times the 40 labour hous by the 60 instead of the 720 tonnes, could be wrong but that seems to bring the 2400 figure

    Janet
  • donnas1977
    donnas1977 Registered Posts: 182 Dedicated contributor 🦉
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    So i does. I will get the tutor to clarify as to get material costs it should be the no x the price.

    Donna
  • mge
    mge Registered Posts: 94 Regular contributor ⭐
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    I get the same answer as you Donna. Looks like an error in the book.
  • donnas1977
    donnas1977 Registered Posts: 182 Dedicated contributor 🦉
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    thanks, i thought i was just going mad! tonight i found another error in the book again same sort of question, will flag it up at class and see if its book error or me.

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