pass through Process I, where Product 'A' is produced. Question 29: A Chemical Company carries on production operation in two processes. The material first Following data are given for the month just ended: Material input quantity Opening work-in-progress quantity (Material 100% and conversion 50% complete) Work completed quantity Closing work-in-progress quantity (Material 100% and conversion two-third complete) Material input cost Processing cost Opening work-in-progress cost Materials cost 2,00,000 kgs 40,000 kgs 1,60,000 kgs 30,000 kgs * 75,000 1,02,000 Processing cost Normal process loss in quantity may be assumed to be 20% of material input. It has no realizable value. Materials Costs Processing Costs * 20,000 * 12,000 Any quantity of Product 'A' can be sold for 1.60 per kg. Alternatively, it can be transferred to Process II for further processing and then sold as Product 'AX' for * 2 per kg. Further materials are added in Process II, which yield two kgs of product 'AX' for every kg of Product 'A' of Process I. 1,20,000 kgs of Product 'A' input 1,32,000 *1,20,000 Of the 1,60,000 kgs per month of work completed in Process 1,40,000 kgs are sold as Product 'A' and 1,20,000 kgs are passed through Process II for sale as Product 'AX'. Process II has facilities to handle upto 1,60,000 kgs of Product 'A' per month, if required. The monthly costs incurred in Process II (other than the cost of Product 'A') are: 1,60,000 kgs of Product 'A' input *1,76,000 X 1,40,000 Required: (i) Determine, using the weighted average cost method, the cost per kg of Product 'A' in Process I and value of both work completed and closing work-in-progress for the month just ended. (ii) Is it processing 1,20,000 kgs of Product 'A' further? (ii) Calculate the minimum acceptable selling price per kg, if a potential buyer could be found for additional. Output of Product 'AX' that could be produced with the remaining Product 'A' quantity.
pass through Process I, where Product 'A' is produced. Question 29: A Chemical Company carries on production operation in two processes. The material first Following data are given for the month just ended: Material input quantity Opening work-in-progress quantity (Material 100% and conversion 50% complete) Work completed quantity Closing work-in-progress quantity (Material 100% and conversion two-third complete) Material input cost Processing cost Opening work-in-progress cost Materials cost 2,00,000 kgs 40,000 kgs 1,60,000 kgs 30,000 kgs * 75,000 1,02,000 Processing cost Normal process loss in quantity may be assumed to be 20% of material input. It has no realizable value. Materials Costs Processing Costs * 20,000 * 12,000 Any quantity of Product 'A' can be sold for 1.60 per kg. Alternatively, it can be transferred to Process II for further processing and then sold as Product 'AX' for * 2 per kg. Further materials are added in Process II, which yield two kgs of product 'AX' for every kg of Product 'A' of Process I. 1,20,000 kgs of Product 'A' input 1,32,000 *1,20,000 Of the 1,60,000 kgs per month of work completed in Process 1,40,000 kgs are sold as Product 'A' and 1,20,000 kgs are passed through Process II for sale as Product 'AX'. Process II has facilities to handle upto 1,60,000 kgs of Product 'A' per month, if required. The monthly costs incurred in Process II (other than the cost of Product 'A') are: 1,60,000 kgs of Product 'A' input *1,76,000 X 1,40,000 Required: (i) Determine, using the weighted average cost method, the cost per kg of Product 'A' in Process I and value of both work completed and closing work-in-progress for the month just ended. (ii) Is it processing 1,20,000 kgs of Product 'A' further? (ii) Calculate the minimum acceptable selling price per kg, if a potential buyer could be found for additional. Output of Product 'AX' that could be produced with the remaining Product 'A' quantity.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:pass through Process I, where Product 'A' is produced,
Question 29: A Chemical Company carries on production operation in two processes. The material first
Following data are given for the month just ended:
Material input quantity
Opening work-in-progress quantity (Material 100% and
conversion 50% complete)
Work completed quantity
Closing work-in-progress quantity (Material 100% and
conversion two-third complete)
Material input cost
2,00,000 kgs
40,000 kgs
1,60,000 kgs
Processing cost
Opening work-in-progress cost
Materials cost
Processing cost
Normal process loss in quantity may be assumed to be 20% of material input. It has no realizable
value.
30,000 kgs
* 75,000
1,02,000
Materials Costs
Processing Costs
Any quantity of Product 'A' can be sold for 1.60 per kg.
Alternatively, it can be transferred to Process II for further processing and then sold as Product 'AX' for
* 2 per kg. Further materials are added in Process II, which yield two kgs of product 'AX' for every kg of
Product 'A' of Process I.
1,20,000 kgs
of Product 'A'
input
*1,32,000
*1,20,000
* 20,000
* 12,000
Of the 1,60,000 kgs per month of work completed in Process 1,40,000 kgs are sold as Product
'A' and 1,20,000 kgs are passed through Process II for sale as Product 'AX'. Process II has facilities
to handle upto 1,60,000 kgs of Product 'A' per month, if required.
The monthly costs incurred in Process II (other than the cost of Product 'A') are:
1,60,000 kgs
of Product 'A'
input
1,76,000
X 1,40,000
Required:
(i) Determine, using the weighted average cost method, the cost per kg of Product 'A' in Process I and
value of both work completed and closing work-in-progress for the month just ended.
(i) Is it processing 1,20,000 kgs of Product 'A' further?
Calculate the minimum acceptable selling price per kg, if a potential buyer could be found for
additional. Output of Product 'AX' that could be produced with the remaining Product 'A' quantity,
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