1-2_2004_jun_a

(ii) Value of transfer of 1,800 units to Process II = 1,600 x (70 + 50) + (120 x 50) + 16,500 = £214,500
Conversion EU 120 1,600 150
–––––– 1,870 –––––– £93,500 –––––––– 1,870 = £50
22 A
Joint costs apportioned to product H:
£
(228 ÷ 640) x 384,000
136,800
Further processing costs
159,600 –––––––-
Total cost of H production (228,000 units)
£ 949,620
937,125
945,000
Variance (£) Rate 12,495 A Efficiency 7,875 F
(c) Rate: – Higher graded workers paid at a higher rate. – Higher than expected wage settlement for the company.
Efficiency: – The higher graded workers being more skilled took less than the standard time. – Highly motivated workers.
Planned activity level
£16
3,750 units
1,600 units –––––––––– 5,350 units ––––––––––
5D CPU Contribution per hour Ranking
X
Y
£8
£10
£4
£2·50
1st
2nd
800 units of product X uses 1,600 hours and in the remaining 400 hours, 100 units of product Y can be manufactured.
–
Started and finished units last month
1,600
Closing work in progress
300
––––––
Work done last month
1,900
––––––
Cost per EU
£133,000 –––––––––
1,900
= £70
(i) Value of closing work in progress = (300 x 70) + (150 x 50) = £28,500
Adverse price variance (0·04 x 2·50 x 12,000) = £1,200
12,000 litres at £2·50 per litre Add Favourable usage variance
Standard cost of actual production
19 B 20 C
b=
11 x 13,467 – (440 x 330) ––––––––––––––––––––––––
(11 x 17,986) – (440)2
£ 112,500 117,000 –––––––-
4,500 favourable –––––––-
= 0·6917
a = (330 ÷ 11) – 0·6917 (440 ÷ 11) = 2·33
9D EOQ = (2 x 20 x (4 x 12,500) = 1,155 0 ⋅10 x 15
10 D 11 D
Total direct labour hours:
Primary (6,000 x 36 ÷ 60) + (7,500 x 48 ÷ 60)
9,600
Finishing (6,000 x 25 ÷ 60) + (7,500 x 35 ÷ 60)
6 C £(40,000 – 20,000) ÷ (20,000 – 4,000) units = £1·25 per unit
7B
8 A Closing stock (units) = 200 + 600 – 150 – 200 – 250 = 200 Issues = £5,200 + (600 – 200) x £32·50 = £18,200
2 (a)
Direct material Actual quantity at actual price
Standard quantity for actual production at standard price Direct labour Actual hours at actual rate
Units
126
24
1,650 –––––– 1,800 ––––––
£
–
4,200
288,750 –––––––– 292,950 ––––––––
(c) – –
In job costing each job is costed separately whereas in process costing it is the process itself which is costed. The total cost of the process is then averaged over all the units of production.
Workings
214,500 + 78,450 Cost per unit = –––––––––––––––––––– = £175
(0·93 x 1,800)
Valuations:
Abnormal loss
= 24 x 175 = £4,200
Finished production = 1,650 x 175 = £288,750
949,620 945,000
565,740 567,000
Total variance
£ 2,100 F
4,620 A
1,260 F
19
(b) Actual hours at actual rate
Actual hours at standard rate
Standard hours for actual production at standard rate
1,740 ––––––-
24 B
L
M
Additional cost of buying in one unit (£)
12
15
Machine hours per unit
13
15
Additional cost of buying in per machine hour (£)
14
13
Ranking for buying in
2nd
1st
Buy in component M.
N
P
24
30
14
16
16
15
4th
3rd
25 D
18
Section B
1 (a) Cost per equivalent unit (EU) calculations for Process I:
Materials
EU
Completion of opening work in progress
21 C
Salary costs (54 x 40) + (110 x 25) Overhead cost (164 x 20)
Total cost Mark-up (40% on total cost)
Final fee
£ 4,910 3,280 –––––––8,190 3,276 –––––––11,466 –––––––-
£
Total contribution from new business (6,000 x 0·45) 2,700
Less Lost contribution from existing business
2 x (6,000 ÷ 15) x 1·20
(960) ––––––-
Overall increase in contribution and profit
6,875
Absorption rates:
Primary (96,000 ÷ 9,600) £10 per hour
Finishing (82,500 ÷ 6,875) £12 per hour
Fixed cost per unit (Y): (48 ÷ 60) x 10 + (35 ÷ 60) x 12 = £15
Answers
Part 1 Examination – Paper 1.2 Financial Information for Management
June 2004 Answers
Section A
1A 2D 3C 4C 5D 6C 7B 8A 9D 10 D 11 D 12 A 13 B 14 C 15 B 16 C 17 C 18 C 19 B 20 C 21 C 22 A 23 A 24 B 25 D
1A
2D
3 C Contribution per unit (CPU) £(60 – 15 – 5) Total fixed cost £(30 x 2,400) Breakeven point (72,000 ÷ 40)