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# Process costing

Experienced MentorRegistered Posts: 694
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 ?

• Trusted Regular SouthamptonRegistered Posts: 456
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.
• Experienced Mentor Registered Posts: 694

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
• Trusted Regular SouthamptonRegistered Posts: 456
OK equivalent costs and closing WIP, not quite so straight forward - Ill have to get back to you :P
• New Member Registered Posts: 9
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!
• Trusted Regular Registered Posts: 302
steveJ wrote: »

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

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

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
• Trusted Regular SouthamptonRegistered Posts: 456
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.
• Trusted Regular Registered Posts: 302
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:
• Experienced Mentor Registered Posts: 694
Cheers everyone ...

I passed that practice exam !! wahooo ...

Thanks again
• Trusted Regular Registered Posts: 302
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?
• Well-Known Registered Posts: 215
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:
• Trusted Regular Registered Posts: 302
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:
• Experienced Mentor Registered Posts: 1,189
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:
• Well-Known Registered Posts: 215
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
• Trusted Regular Registered Posts: 302
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

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:
• Trusted Regular Registered Posts: 302
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:
• Experienced Mentor Registered Posts: 694
Nice one Mark:thumbup1: