Deck 11: Process Costing

Question 1

UTD Limited operates a process accounting system for its production of chemicals. During the month of January, Process Y used 6,000 litres of material at a cost of £38,880. Labour and overhead costs during the month were £19,440. Normal losses in the process are 10% of input materials. 5,400 litres of chemicals were produced from Process Y in January. What is the value per litre of finished production for the month of January?

A) £6.48
B) £7.20
C) £9.72
D) £10.80

Answer 1

£10.80

Question 2

Selling normal losses from a process reduces costs on the process account.

Answer 2

True

Question 3

In February, 8,000 litres of material were input to a process at a cost of £18,432. Normal loss in the process is expected to be 4% of input materials. Process conversion costs for the month totalled up to £15,360. The process produced 7,560 litres of finished production in February. What were the values attributed to normal and abnormal losses in February?

A) Normal losses: £Nil, Abnormal losses: £Nil
B) Normal losses: £Nil, Abnormal losses: £528
C) Normal losses: £1,408, Abnormal losses: £528
D) Normal losses: £Nil, Abnormal losses: £1,936

Answer 3

Normal losses: £Nil, Abnormal losses: £528

Question 4

In April, BFS Limited used 10,000 litres of input materials in its paint making process. These materials cost £21,600. In addition, the paint making process for the month consumed £14,400 of conversion costs. Normal losses in the paint making process are 4% of input materials. 9,680 litres of paint were produced in April. What is the total cost of finished production of paint in April?

A) £34,848
B) £35,700
C) £36,000
D) £36,300

Question 5

VBT Limited produced 4,700 litres of power washer fluid in June. Normal losses are 6% of input materials. All losses have a disposal cost of £0.94 per litre. Materials for the month cost £18,800 while conversion costs were £11,750. There were no abnormal gains or losses in production of power washer fluid in June. What is the per litre cost of the finished production of power washer fluid in June?

A) £6.44
B) £6.50
C) £6.56
D) £6.97

Question 6

When waste products from processes are sold, the proceeds from the sale of both normal losses and abnormal losses are credited to the process account.

Question 7

The disposal of normal losses from a process reduces the costs of that process.

Question 8

In September, STF Limited used 4,000 litres of material in its production of high strength sealant. Normal losses are 10% of input materials. All losses can be sold for £0.72 per litre. Materials for the month cost £34,560 while conversion costs were £16,128. 3,600 litres of high strength sealant were produced during September. What is the per litre cost of the finished production of high strength sealant in September?

A) £12.60
B) £14.00
C) £14.08
D) £14.16

Question 9

Gaseous Generation Limited produces gases for industrial use. In May, Process Gamma used 10,000 cubic metres of gas at a cost of £34,960. Waste gases generated by Process Gamma are expected to be 8% of input materials. Process Gamma conversion costs for May were £23,000. Waste gases from Process Gamma can be sold for 46 pence per cubic metre. Production in May was 9,000 cubic metres. What are the cost of finished production and the cost of abnormal losses that will be presented in the process account for Process Gamma for the month of May?

A) Cost of finished production: £56,250, Abnormal losses: £1,250
B) Cost of finished production: £56,340, Abnormal losses: £1,252
C) Cost of finished production: £56,700, Abnormal losses: £1,260
D) Cost of finished production: £57,592, Abnormal losses: £368

Question 10

XJC Limited makes and sells paints to the home decorating market. During October the company produced 4,810 litres of paint. Normal losses are expected to be 5% of input materials. These normal losses can be sold for 64 pence a litre. 5,000 litres of material were put into the paint making process during October at a cost of £28,535. Conversion costs for the month were £12,000. What is the total cost of actual finished paint production for October?

A) £40,375
B) £40,535
C) £40,695
D) £40,885

Question 11

Process Delta produced 8,448 litres of finished production during November. There was an abnormal gain of 48 litres in the month and normal losses are expected to be 4% of input materials. How many litres of material were input into Process Delta during November?

A) 8,736
B) 8,750
C) 8,800
D) 8,850

Question 12

TTD Limited produces specialist solvents. In June, 2,000 litres of material costing £44,100 were input to Process Sigma. Conversion costs for the month were £12,936. Normal losses from the process are 2% of input materials and the disposal cost for each litre of losses is £4.90. During June, 1,950 litres of finished product were produced from Process Sigma. What is the cost to be attributed to each unit of finished production, abnormal gains and abnormal losses in Process Sigma for June?

A) £29.00
B) £29.10
C) £29.20
D) £29.35

Question 13

TYN Limited produces adhesives. In July, 3,000 litres of material were used to produce 2,790 litres of super-strength glue. Materials costs for the month were £27,072 and labour and overheads added to the process amounted to £18,189. All losses from the process are sold for £2.35 per litre. Normal losses are 6% of input materials. What is the per litre cost of production for super-strength glue in July?

A) £15.90
B) £16.05
C) £16.07
D) £16.20

Question 14

In August, JXZ Limited used 7,500 litres of input materials to produce 7,240 litres of body lotion at a cost of £18,900. Conversion costs for the process were £9,840. Waste products from the body lotion process are sold for 40 pence per litre. Normal losses from the body lotion making process are expected to be 4% of input materials. What is the production cost of 7,240 litres of body lotion in August?

A) £28,620
B) £28,740
C) £28,779
D) £28,899

Question 15

TDV Limited makes shower gels. In May, the shower gel production process used 20,000 litres of materials at a cost of £11,760 and incurred £3,822 of conversion costs. Normal losses from the shower gel production process are 2% of input materials and all waste products from the process are disposed of at a cost of 24.5 pence per litre. During May 19,700 litres of shower gel were produced. What is the production cost of the 19,700 litres of shower gel produced in May?

A) £15,484
B) £15,563
C) £15,680
D) £15,760

Question 16

Which one of the following statements is true?

A) Abnormal losses arise when there are losses that are lower than the expected losses from a process.
B) When abnormal losses arise, both normal and abnormal losses are valued in the process account.
C) Abnormal losses are valued at the unit cost of the expected finished output from a process.
D) Abnormal losses are part of normal production and so are rolled up into the expected cost of expected finished output from a process.

Question 17

For2For Limited operates a process in which there is opening and closing work in progress. At the start of May, opening work in progress consisted of 4,000 units which were 75% complete with respect to materials. 36,000 units of finished production were completed during May. At the end of the month, there were 5,000 units of work in progress which were 80% complete with respect to materials. What is the number of equivalent units of material added to the process during the month of May using the first in, first out method of valuing finished production and closing work in progress?

A) 37,000
B) 39,000
C) 40,000
D) 41,000

Question 18

All inputs and outputs in the process account are valued in terms of both money and units.

Question 19

The weighted average cost method of valuing finished production and closing work in progress takes no account of the equivalent units in opening work in progress.

Question 20

JTS Limited operates a process in which there is opening and closing work in progress. At the start of June, opening work in progress consisted of 7,500 units which were 60% complete with respect to materials. 42,000 units of finished production were completed during June. At the end of the month, there were 8,000 units of work in progress which were 80% complete with respect to materials. What is the number of equivalent units of material added to the process during the month of June using the first in, first out method of valuing finished production and closing work in progress?

A) 39,100
B) 40,600
C) 43,600
D) 43,900

Question 21

Which one of the following statements is false?

A) The number of units of normal losses is added to the units of input material on the credit side of the process account.
B) The cost of normal losses is rolled up into the cost of the units of expected output from a process.
C) Normal losses are valued as part of the output from a process.
D) Normal losses are expected losses and are allowed for in the budget for each process.

Question 22

TFP Limited operates a process costing system and uses the first in first out method when valuing closing work in progress and finished units of production. During the month of August, 31,300 equivalent units of material were used in the process. The 2,000 units of opening work in progress were 60% complete with respect to materials. At the end of August, work in progress consisted of 5,000 units which were 50% complete with respect to materials. How many units of production were started and completed during the month of August?

A) 27,600
B) 28,000
C) 28,800
D) 30,000

Question 23

Which one of the following statements is not true?

A) Normal losses are never given a value in the process account.
B) Abnormal losses are never given a value in the process account.
C) Abnormal losses are a credit entry in the process account.
D) Normal losses are a credit entry in the process account.

Question 24

Chuggles Limited makes soft drinks. During November, the company produced 30,000 litres of finished product. Opening work in progress at 1 November was 5,000 litres which were 65% complete with respect to materials. At 30 November, there were 4,000 litres of product which were 70% complete with respect to materials. Chuggles Limited uses the weighted average cost method to value finished goods and closing work in progress. What were the equivalent units of material used in the soft drinks process during November?

A) 29,550
B) 31,200
C) 32,800
D) 33,250

Question 25

A process incurs total costs in October of £483,840. Total inputs of material to the process amounted to 6,000 units. At the end of October, 5,400 units of finished production had been completed at a cost of £453,600. At 31 October there were 600 units of work in progress with a cost of £30,240. There was no work in progress in the process at 1 October. What is the % completion of the closing work in progress in the process?

A) 6.25%
B) 10.00%
C) 60.00%
D) 62.50%

Question 26

PCJ Limited operates a process costing system. At the start of July, work in progress (WIP) of 500 units was 60% complete with respect to materials and had a cost of £1,150. 5,000 units of product were transferred to finished goods during July. At the end of July, WIP consisted of 600 units of product which were 50% complete with respect to materials. Materials costs incurred by the process during July were £20,050. PCJ Limited uses the first in first out (FIFO) method when valuing closing work in progress and finished goods. How much materials cost is included in the production cost of goods transferred to finished goods during July?

A) £18,847
B) £19,928
C) £19,997
D) £20,000

Question 27

PJS Limited produces liquid industrial cleaners. At 1 December, work in progress consisted of 800 litres of product which were 75% complete with respect to materials and 60% complete with respect to labour and overhead. 8,000 litres of liquid industrial cleaner were produced during December and transferred to the finished goods store. At 31 December, work in progress consisted of 600 litres of product which were 40% complete with respect to materials and 30% complete with respect to labour and overhead. PJS uses the weighted average cost valuation method to value units of work in progress and finished goods. What were the equivalent units of material and conversion costs to be applied in determining the cost of finished goods and work in progress in December?

A) Material: 7,640 equivalent units, Conversion: 7,700 equivalent units.
B) Material: 8,240 equivalent units, Conversion: 7,700 equivalent units.
C) Material: 7,640 equivalent units, Conversion: 8,180 equivalent units.
D) Material: 8,240 equivalent units, Conversion: 8,180 equivalent units.

Question 28

TKC Limited operates a process costing system. At 1 June, work in progress (WIP) of 800 units was 50% complete with respect to materials, labour and overhead and had a cost of £16,800. 6,200 units of product were transferred to finished goods during June. At the end of the month, WIP consisted of 250 units of product which were 80% complete with respect to materials, labour and overhead. Costs incurred by the process during June were £268,800. TKC Limited uses the weighted average cost method when valuing closing work in progress and finished goods. What was the production cost of goods transferred to finished goods during June?

A) £260,400
B) £276,080
C) £276,640
D) £276,675

Question 29

BKY Limited produces advanced lubricants. The company uses a process costing system to determine costs for work in progress and finished goods production. At 1 May, there were 250 litres of advanced lubricant work in progress with a value of £1,560. This opening work in progress was 80% complete with respect to all costs incurred in the advanced lubricant production process. During May, 3,000 litres of advanced lubricant were completed and transferred to finished goods. The cost per equivalent unit for costs incurred during May was £8. The company uses the first in first out method to allocate costs to finished goods and closing work in progress. What was the total production cost of the 3,000 units transferred to finished goods in May?

A) £22,400
B) £23,960
C) £24,000
D) £25,560

Question 30

Which one of the following statements is false?

A) Disposal costs of waste products from a process are income for a business.
B) Disposal costs are included in the process account for normal losses only.
C) Disposal costs for normal losses are debited to the process account.
D) Disposal costs for normal losses increase the production cost of each unit of finished output from the process.

Question 31

Whimper Chemicals Limited has started a new process producing silent explosives. During the month of April, 10,000 units of material were input to the process at a cost of £20,000. Labour costs incurred in the month were £11,600 and overheads added to the process totalled up to £6,032. Normal losses from the process are 2% of input materials. 9,100 units of finished production were transferred to finished goods stores during the month. At 30 April, there were 800 units of work in progress (WIP) which were 75% complete with respect to materials, labour and overhead. What is the cost per equivalent unit that will be used in valuing finished production, work in progress, abnormal gains and abnormal losses in the silent explosives process?

A) £3.84
B) £3.88
C) £3.92
D) £3.96

Question 32

At 1 January, ACB Limited had 800 litres of solvent that were 80% complete with respect to all inputs of material, labour and overhead. This opening work in progress was valued at £4,200. During January, 12,000 litres of material were input to the process. Total costs for January for materials, labour and overhead amounted to £79,200. Normal loss from the process is 4% of input materials. During the month 11,320 litres of finished solvent were transferred to the next process. Work in progress at the end of the month amounted to 1,000 litres which were 32% complete with respect to materials, labour and overhead. There were no abnormal gains or losses in the process during January. ACB Limited values output and closing work in progress from its solvent process using the first in first out method of valuation. What is the value of closing work in progress at the end of January?

A) £2,112
B) £2,239
C) £2,293
D) £2,304

Question 33

SPM Limited produces paints. The company process costing system works on a first in first out basis in determining the costs of closing work in progress and finished goods production. At 1 June, there were 500 litres of work in progress with a value of £3,600. This opening work in progress was 75% complete with respect to all costs incurred in the paint production process. By the end of June, the total cost of paint transferred to finished goods was £49,850. The cost per equivalent litre of production for the month was £10 and there was no closing work in progress in the paint production process at 30 June. How many litres of paint were transferred to finished goods in June?

A) 4,500
B) 4,625
C) 4,985
D) 5,000

Question 34

At 1 March, TFP Limited had 2,000 litres of liquid fertiliser that were 60% complete with respect to all inputs of material, labour and overhead. This opening work in progress (WIP) was valued at £5,692. During March, 20,000 litres of material were input to the process. Total costs for March for materials, labour and overhead amounted to £82,500. During the month 20,000 litres of liquid fertiliser were transferred to finished goods. Work in progress (WIP) at the end of the month amounted to 2,000 litres which were 40% complete with respect to materials, labour and overhead. TFP Limited values output and work in progress (WIP) from its liquid fertiliser process using the weighted average cost valuation method. What is the value of closing work in progress (WIP) using the weighted average cost method at the end of March?

A) £3,367
B) £3,392
C) £3,600
D) £5,088

Question 35

Which one of the following statements is false?

A) An abnormal loss represents a loss of expected finished production from a process.
B) The cost of abnormal losses is reported as an expense in the costing statement of profit or loss in the accounting period in which it arises.
C) Highlighting the cost of abnormal losses from a process encourages management to investigate the causes of the abnormal loss and to take corrective action where necessary.
D) Abnormal losses are a debit in the process account.

Question 36

At 1 July, AFB Limited's oil refining process had 400 litres of work in progress valued at £8,930. This work in progress was 70% complete with respect to materials and 50% complete with respect to conversion costs. The cost of opening work in progress was made up of £5,978 of materials cost and £2,952 of conversion costs. During the month, 2,500 litres of material were added to the process at a cost of £52,460 for materials and £36,900 for conversion costs. Output from the oil refining process in June was 2,600 litres. Work in progress at 30 June consisted of 300 litres which were 40% complete with respect to materials and 20% complete with respect to conversion costs. AFB Limited uses the first in first out (FIFO) method to value work in progress (WIP) and finished units of output. What is the value of work in progress in the oil refining process at 30 June?

A) £3,404
B) £3,477
C) £3,480
D) £3,846

Question 37

Which one of the following statements is false?

A) Abnormal gains arise when the actual losses from a process are lower than expected.
B) Abnormal gains reduce the units of normal losses reported in the process account.
C) Abnormal gains are valued and accounted for separately in the process account.
D) Abnormal gains are valued at the expected cost of normal production.

Question 38

Late N Tyle Limited makes treacle. At the start of November, there were 5,000 litres of work in progress which were 60% complete in respect of all inputs. Opening work in progress was valued at £2,000. During the month, 101,000 litres of treacle were produced. Materials for the month cost £61,250 and conversion costs for the month amounted to £10,910. At the end of November, there were 2,500 litres of work in progress which were 80% complete in respect of all inputs. Late N Tyle Limited uses the weighted average cost method to value work in progress and finished goods. What is the value of closing work in progress that Late N Tyle will record in the process account for November?

A) £1,440.00
B) £1,443.20
C) £1,483.20
D) £1,800.00

Question 39

Which one of the following statements is false?

A) Abnormal gains represent a gain over and above the expected finished production from a process.
B) Abnormal gains are reported as additional income in the costing statement of profit or loss.
C) Abnormal gains reduce the unit cost of finished production from a process in the month in which the abnormal gain is realized.
D) Abnormal gains are a debit entry in the process account.

Question 40

TTK Limited produces specialist paints for motor vehicle manufacturers. The company uses a process costing system to determine costs for closing work in progress and finished goods production. At 1 June, there were 5,000 litres of metallic blue paint work in progress with a value of £35,750. This opening work in progress was 65% complete with respect to all costs incurred in the metallic blue paint production process. During June, 25,000 litres of metallic blue paint were completed and transferred to finished goods. The cost per equivalent unit for costs incurred in June was £12. The company uses the weighted average cost method to allocate costs to finished goods and closing work in progress. What was the total production cost of the 25,000 units transferred to finished goods in June?

A) £261,000
B) £296,750
C) £300,000
D) £335,750

Question 41

PTP Limited produces detergents. Normal losses from the detergent making process are 10% of materials input. Normal and abnormal losses from the process incur a disposal cost of £3.00 per litre. During February, 10,000 litres of material were used in the process at a cost of £30 per litre. The unit cost used to value finished output, abnormal gains and abnormal losses is £50. What is the conversion (labour and overhead) cost for the month of February?

A) £147,000
B) £150,000
C) £153,000
D) £197,000

Question 42

ADC Limited produces paints. In March, the Rose Red production process used 12,000 litres of material at a cost of £120,000 and incurred conversion costs of £75,000. Normal losses are 10% of input materials. All losses from the process can be sold for £0.50 per litre. During March, 10,600 litres of Rose Red paint were produced. What is the balance on the abnormal loss account that will be reported to management in the costing statement of profit or loss for March?

A) £3,000
B) £3,500
C) £3,600
D) £3,700

Question 43

TFT Limited produces industrial solvent. In June, 8,000 litres of material were input to the process at a cost of £45,000. Conversion costs in the month totalled up to £30,696. Normal losses from the process are 5% of input materials. All losses from the process incur a disposal cost of 76 pence per litre. Output from the process in June was 7,350 litres of industrial solvent. What is the balance on the abnormal loss account that will be reported to management in the costing statement of profit or loss in June?

A) £2,290
B) £2,310
C) £2,670
D) £2,690

Question 44

BBD Limited produces adhesives. In August, 9,000 litres of material were input to the super adhesive glue process at a cost of £32,400. Conversion costs in the month totalled up to £11,916. Normal losses from the process are 6% of input materials. All losses from the process can be sold for 60 pence per litre. Output from the process in August was 8,550 litres of super adhesive glue. What is the balance on the abnormal gain account that will be reported to management in the costing statement of profit or loss in August?

A) £414
B) £468
C) £475
D) £522