week 2 SUFE Process Costing week 2 Feb 2012

50 200 150 costs costs per unit per 1600 400 step

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 0 7800 11700 $ 3.50 $ 2.00 $ 1.50 Costs Costs per unit per 1600 400 Step 5) Cost of production report… Cost • Finished Goods: 7400 units at $ 3.50= $ 25.900 • Closing work in Process: (30th April 2005) – Materials 1600 units at $ 2.00= $ 3,200 – Conversion costs in WIP 400 (equivalent) units at $ 1.50=$ 600 – Total $ 3,800 • Costs Accounted for: Costs $ 25,900+$3,800=$29,700 Spoilage (waste) • Production losses are normal in every manufacturing process – Losses do occur because of: – Machine malfunctions – Sub-standard raw materials – Incorrect machine set-ups – Poor workmanship – Inherent with nature of production process We separate • Avoidable spoilage: poor workmanship, poor raw materials etc. (the causes are controllable by the company) the • Unavoidable spoilage: unavoidable under efficient production circumstances (normal spoilage) This normal spoilage should be included in the cost price of a product product • When total spoilage>normal When spoilage the company must have had controllable (avoidable) spoilage… spoilage… Example…process cost sheet… • For SILCO Ltd. SILCO We have the following data over April 2005: • In April 10200 units were transferred to finished goods • There were 100 units normal spoilage material labour overhead WIP 1st 3000 3000 3000 % completion completion 100% 50% 50% WIP 30th 2000 2000 2000 % completion completion 100% 75% 75% WIP 1st in $ $ 11000 $ 3750 $ 1750 Inputs in $ $38000 $26250 $15750 Process Cost Sheet Material Units Material $ Labour Units Labour $ Overhead Overhead units units Overhead $ Total Units Total $ WIP 1st 3000 $11000 1500 $3750 1500 $1750 3000 $ 16500 Input 9300 $38000 10300 $26250 10300 $15,750 9300 $80,000 Total 12300 $49000 11800 $30000 11800 $17,500 12300 $ 96,500 Finished 10200 Finished Goods Goods $40419 10200 $25920 10200 $ 15,052 10200 $ 81,391 Spoil $ 409 409 100 $255 100 $ 153 100 $ 817 $ 2,295 2000 $ 14,292 $ 17,500 12300 $ 96,500 100 WIP WIP 30th 30th 2000 Total 12300 Cost/unit $ 4.09 (100*$4.09) (100*$4.09) (100*$2.55) $ 8172 1500 $3825 1500 (2000*$4.09) (75%*2000) (1500*$2.55) (75%*2000) $49000 $30000 $ 2.55 $ 1.53 Tutorial Exercise : Magnum Ltd. Magnum Ltd. Produces ice creams. All materials are added at the beginning of the process, labor and overhead are added by % of completion (uniformly) Details for January 2008 were: WIP 1st january: 10 M units 75% completed Units started in production in January: 17.5 M units WIP 31st Januar...
View Full Document

Ask a homework question - tutors are online