2.The company "Chanos Ltd" produces puzzles for adults within the framework of a standardized mass production. The production process uses 2 basic raw materials: cardboard and high quality ink. For the manufacture of a puzzle, half a square meter of cardboard and 0.1 kg of ink are required. The cardboard is inserted at the beginning of the production process and the ink is added at the end by printing the design on the now perforated puzzle. The company uses the cost flow assumption F.I.F.O. to value its inventories. Here are some data for the month of August 20X6: The initial stock of semi-finished on 1/8/20X6 was 2,000 puzzles processed at 20% in terms of conversion costs. The cost of the initial stock amounted to €28,000 in terms of cardboard costs and €35,000 in terms of conversion costs. The conversion cost for the month amounted to € 20,300. The final stock of semi-finished on 31/8/20X6 was 3,000 puzzles processed at 40% in terms of conversion costs. Data are also given regarding the initial stock and purchases of cardboard and ink for the month of August 20X6 Cardboard Ink Quantity Price/Mon. Value Quantity Price/Mon. Value Initial Stock 1.000 sq.m € 2,8/sq.m € 2,800 200 kg € 10/kg € 2.000 Markets 4.000 sq.m € 2,5/sq.m € 10,000 600 kg € 16/kg € 9.600 € 12,800 € 11.600 The final stock of cardboard was 2,000 square meters and ink was 300 kg. To calculate the production cost of finished and semi-finished products in the Cutting Department of the production process by presenting in detail all the logical steps. Also, prepare the monthly Production Cost Report assuming that the company uses the F.I.F.O. cost stream assumption.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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2.The company "Chanos Ltd" produces puzzles for adults within the framework of a standardized mass production. The production process uses 2 basic raw materials: cardboard and high quality ink. For the manufacture of a puzzle, half a square meter of cardboard and 0.1 kg of ink are required. The cardboard is inserted at the beginning of the production process and the ink is added at the end by printing the design on the now perforated puzzle. The company uses the cost flow assumption F.I.F.O. to value its inventories.

Here are some data for the month of August 20X6:

The initial stock of semi-finished on 1/8/20X6 was 2,000 puzzles processed at 20% in terms of conversion costs. The cost of the initial stock amounted to €28,000 in terms of cardboard costs and €35,000 in terms of conversion costs.
The conversion cost for the month amounted to € 20,300.
The final stock of semi-finished on 31/8/20X6 was 3,000 puzzles processed at 40% in terms of conversion costs.

Data are also given regarding the initial stock and purchases of cardboard and ink for the month of August 20X6

	Cardboard	Ink
	Quantity	Price/Mon.	Value	Quantity	Price/Mon.	Value
Initial Stock	1.000 sq.m	€ 2,8/sq.m	€ 2,800	200 kg	€ 10/kg	€ 2.000
Markets	4.000 sq.m	€ 2,5/sq.m	€ 10,000	600 kg	€ 16/kg	€ 9.600
			€ 12,800			€ 11.600

The final stock of cardboard was 2,000 square meters and ink was 300 kg.

To calculate the production cost of finished and semi-finished products in the Cutting Department of the production process by presenting in detail all the logical steps. Also, prepare the monthly Production Cost Report assuming that the company uses the F.I.F.O. cost stream assumption.

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