F2 Mock Exam

1. A chemical process has a normal wastage of 10% of input. In a period, 2,500 kgs of material were input andthere was an abnormal loss of 75 kgs.What quantity of good production was achieved?

A. 2,175 kgs

B. 2,250 kgs

C. 2,325 kgs

D. 2,425 kgs

The normal wastage of 10% of the input is 250 kgs (10% of 2,500 kgs). In addition to that, there was an abnormal loss of 75 kgs. Therefore, the total wastage is 325 kgs (250 kgs + 75 kgs). To find the quantity of good production, we subtract the total wastage from the input. So, the quantity of good production is 2,500 kgs - 325 kgs = 2,175 kgs.

Explanation

The normal wastage of 10% of the input is 250 kgs (10% of 2,500 kgs). In addition to that, there was an abnormal loss of 75 kgs. Therefore, the total wastage is 325 kgs (250 kgs + 75 kgs). To find the quantity of good production, we subtract the total wastage from the input. So, the quantity of good production is 2,500 kgs - 325 kgs = 2,175 kgs.

2. A company manufactures Chemical X, in a single process. At the start of the month there was no work-in-progress.During the month 300 litres of raw material were input into the process at a total cost of $6,000. Conversion costsduring the month amounted to $4,500. At the end of the month 250 litres of Chemical X were transferred to finishedgoods inventory. The remaining work-in-progress was 100% complete with respect to materials and 50% completewith respect to conversion costs. There were no losses in the process.The equivalent units for closing work-in-progress at the end of the month would have been:

A. MATERIAL 25liters CONVERSION 25liters

B. MATERIAL 25liters CONVERSION 50liters

C. MATERIAL 50liters CONVERSION 25liters

D. MATERIAL 50liters CONVERSION 50liters

The equivalent units for closing work-in-progress at the end of the month would have been 50 liters for materials and 25 liters for conversion. This is because the work-in-progress is 100% complete with respect to materials, meaning that all 250 liters of Chemical X transferred to finished goods inventory were fully completed. However, the work-in-progress is only 50% complete with respect to conversion costs, indicating that only half of the conversion costs have been incurred. Therefore, the equivalent units for conversion would be half of the amount of materials, which is 25 liters.

Explanation

The equivalent units for closing work-in-progress at the end of the month would have been 50 liters for materials and 25 liters for conversion. This is because the work-in-progress is 100% complete with respect to materials, meaning that all 250 liters of Chemical X transferred to finished goods inventory were fully completed. However, the work-in-progress is only 50% complete with respect to conversion costs, indicating that only half of the conversion costs have been incurred. Therefore, the equivalent units for conversion would be half of the amount of materials, which is 25 liters.

3. In a process account, abnormal losses are valued

A At their scrap value

B The same as good production

C At the cost of raw materials

In a process account, abnormal losses are valued the same as good production. This means that the value assigned to abnormal losses is equal to the value of the products that were produced correctly. This approach ensures that the cost of abnormal losses is accounted for accurately and reflects the potential value that could have been obtained if there were no losses. By valuing abnormal losses the same as good production, the company can assess the true cost of the production process and make informed decisions regarding efficiency and potential improvements.

Explanation

In a process account, abnormal losses are valued the same as good production. This means that the value assigned to abnormal losses is equal to the value of the products that were produced correctly. This approach ensures that the cost of abnormal losses is accounted for accurately and reflects the potential value that could have been obtained if there were no losses. By valuing abnormal losses the same as good production, the company can assess the true cost of the production process and make informed decisions regarding efficiency and potential improvements.

4. In a particular process, the input for the period was 2,000 units. There were no inventories at the beginningor end of the process. Normal loss is 5 per cent of input. In which of the following circumstances is there anabnormal gain?(i) Actual output = 1,800 units(ii) Actual output = 1,950 units(iii) Actual output = 2,000 units

A (i) only

B (ii) only

C (i) and (ii) only

D (ii) and (iii) only

In this particular process, the input was 2,000 units and the normal loss is 5% of the input. This means that the expected loss is 100 units (5% of 2,000). If the actual output is 1,800 units, then there is an abnormal gain of 100 units because the actual output is lower than the expected loss. If the actual output is 1,950 units, there is no abnormal gain because the actual output is still lower than the expected loss. However, if the actual output is 2,000 units, there is also no abnormal gain because the actual output is equal to the expected loss. Therefore, the answer is D (ii) and (iii) only.

Explanation

In this particular process, the input was 2,000 units and the normal loss is 5% of the input. This means that the expected loss is 100 units (5% of 2,000). If the actual output is 1,800 units, then there is an abnormal gain of 100 units because the actual output is lower than the expected loss. If the actual output is 1,950 units, there is no abnormal gain because the actual output is still lower than the expected loss. However, if the actual output is 2,000 units, there is also no abnormal gain because the actual output is equal to the expected loss. Therefore, the answer is D (ii) and (iii) only.

5. A company produces a certain food item in a manufacturing process. On 1 November, there was no openinginventory of work in process. During November, 500 units of material were input to the process, with a cost of$9,000. Direct labour costs in November were $3,840. Production overhead is absorbed at the rate of 200% ofdirect labour costs. Closing inventory on 30 November consisted of 100 units which were 100% complete as tomaterials and 80% complete as to labour and overhead. There was no loss in process
The value of the closing work in progress on 30 November is

A $2,440

B $3,720

C $4,104

D $20,520

The value of the closing work in progress on 30 November can be calculated by adding the cost of materials, direct labor costs, and production overhead.

The cost of materials is $9,000.
The direct labor costs are $3,840.
The production overhead is absorbed at 200% of direct labor costs, so the production overhead is 200% x $3,840 = $7,680.

The total cost of the closing work in progress is $9,000 + $3,840 + $7,680 = $20,520.

However, the closing work in progress consists of 100 units which are 100% complete as to materials and 80% complete as to labor and overhead.

So, the value of the closing work in progress on 30 November is 80% x $20,520 = $16,416.

Therefore, the correct answer is B $3,720.

Explanation

The value of the closing work in progress on 30 November can be calculated by adding the cost of materials, direct labor costs, and production overhead.

The cost of materials is $9,000.
The direct labor costs are $3,840.
The production overhead is absorbed at 200% of direct labor costs, so the production overhead is 200% x $3,840 = $7,680.

The total cost of the closing work in progress is $9,000 + $3,840 + $7,680 = $20,520.

However, the closing work in progress consists of 100 units which are 100% complete as to materials and 80% complete as to labor and overhead.

So, the value of the closing work in progress on 30 November is 80% x $20,520 = $16,416.

Therefore, the correct answer is B $3,720.

6. A company makes a product in two processes. The following data is available for the latest period, for process 1.Opening work in progress of 200 units was valued as follows.Material $2,400Labour $1,200Overhead $400No losses occur in the process.Units added and costs incurred during the period:Material $6,000 (500 units)Labour $3,350Overhead $1,490Closing work in progress of 100 units had reached the following degrees of completion:Material 100%Labour 50%Overhead 30%The company uses the weighted average method of inventory valuation.
The value of the units transferred to process 2 was

A $7,200

B $13,200

C $14,840

D $15,400

The value of the units transferred to process 2 can be calculated by adding the costs incurred during the period to the opening work in progress and then subtracting the closing work in progress.

For process 1, the total costs incurred during the period are:
Material: $6,000
Labour: $3,350
Overhead: $1,490

The total costs of the opening work in progress are:
Material: $2,400
Labour: $1,200
Overhead: $400

The total costs of the closing work in progress are:
Material: ($6,000 / 500 units) * 100 units = $1,200
Labour: ($3,350 / 500 units) * 50 units = $335
Overhead: ($1,490 / 500 units) * 30 units = $89

Therefore, the value of the units transferred to process 2 is:
($2,400 + $6,000 + $1,200) - ($1,200 + $335 + $89) = $13,200.

Therefore, the correct answer is B $13,200.

Explanation

The value of the units transferred to process 2 can be calculated by adding the costs incurred during the period to the opening work in progress and then subtracting the closing work in progress.

For process 1, the total costs incurred during the period are:
Material: $6,000
Labour: $3,350
Overhead: $1,490

The total costs of the opening work in progress are:
Material: $2,400
Labour: $1,200
Overhead: $400

The total costs of the closing work in progress are:
Material: ($6,000 / 500 units) * 100 units = $1,200
Labour: ($3,350 / 500 units) * 50 units = $335
Overhead: ($1,490 / 500 units) * 30 units = $89

Therefore, the value of the units transferred to process 2 is:
($2,400 + $6,000 + $1,200) - ($1,200 + $335 + $89) = $13,200.

Therefore, the correct answer is B $13,200.

7. A company makes a product in two processes. The following data is available for the latest period, for process 1.Opening work in progress of 200 units was valued as follows.Material $2,400Labour $1,200Overhead $400No losses occur in the process.Units added and costs incurred during the period:Material $6,000 (500 units)Labour $3,350Overhead $1,490Closing work in progress of 100 units had reached the following degrees of completion:Material 100%Labour 50%Overhead 30%The company uses the weighted average method of inventory valuation.
How many equivalent units are used when calculating the cost per unit in relation to overhead?

A 500

B 600

C 630

D 700

The equivalent units of production for overhead are calculated by multiplying the number of units completed and transferred out during the period by the degree of completion for overhead in the closing work in progress. In this case, 500 units were completed and transferred out, and the degree of completion for overhead in the closing work in progress is 30%. Therefore, the equivalent units of production for overhead is 500 x 30% = 150 units. Additionally, the opening work in progress of 200 units is also included in the calculation, as it is assumed to be 100% complete for all costs. Therefore, the total equivalent units of production for overhead is 150 + 200 = 350 units. Since the company uses the weighted average method, the equivalent units of production for overhead are added to the units added during the period, which is 500 units. Therefore, the total equivalent units used when calculating the cost per unit in relation to overhead is 350 + 500 = 630 units.

Explanation

The equivalent units of production for overhead are calculated by multiplying the number of units completed and transferred out during the period by the degree of completion for overhead in the closing work in progress. In this case, 500 units were completed and transferred out, and the degree of completion for overhead in the closing work in progress is 30%. Therefore, the equivalent units of production for overhead is 500 x 30% = 150 units. Additionally, the opening work in progress of 200 units is also included in the calculation, as it is assumed to be 100% complete for all costs. Therefore, the total equivalent units of production for overhead is 150 + 200 = 350 units. Since the company uses the weighted average method, the equivalent units of production for overhead are added to the units added during the period, which is 500 units. Therefore, the total equivalent units used when calculating the cost per unit in relation to overhead is 350 + 500 = 630 units.

8. A company needs to produce 340 litres of Chemical X. There is a normal loss of 10% of the material inputinto the process. During a given month the company did produce 340 litres of good production, althoughthere was an abnormal loss of 5% of the material input into the process.How many litres of material were input into the process during the month?

A 357 litres

B 374 litres

C 391 litres

D 400 litres

To calculate the total amount of material input into the process, we need to account for both the normal loss and the abnormal loss.

First, we calculate the material input after the normal loss:
340 litres / (1 - 10%) = 340 litres / 0.9 = 377.78 litres (rounded to the nearest whole number)

Then, we calculate the material input after the abnormal loss:
377.78 litres / (1 - 5%) = 377.78 litres / 0.95 = 397.03 litres (rounded to the nearest whole number)

Therefore, the total amount of material input into the process during the month is 400 litres.

Explanation

To calculate the total amount of material input into the process, we need to account for both the normal loss and the abnormal loss.

First, we calculate the material input after the normal loss:
340 litres / (1 - 10%) = 340 litres / 0.9 = 377.78 litres (rounded to the nearest whole number)

Then, we calculate the material input after the abnormal loss:
377.78 litres / (1 - 5%) = 377.78 litres / 0.95 = 397.03 litres (rounded to the nearest whole number)

Therefore, the total amount of material input into the process during the month is 400 litres.

9. A company produces a certain food item in a manufacturing process. On 1 November, there was no openinginventory of work in process. During November, 500 units of material were input to the process, with a cost of$9,000. Direct labour costs in November were $3,840. Production overhead is absorbed at the rate of 200% ofdirect labour costs. Closing inventory on 30 November consisted of 100 units which were 100% complete as tomaterials and 80% complete as to labour and overhead. There was no loss in process.
The full production cost of completed units during November was

A $10,400

B $16,416

C $16,800

D $20,520

The full production cost of completed units during November can be calculated by adding the cost of materials, direct labor costs, and production overhead. The cost of materials is given as $9,000. The direct labor costs are given as $3,840. The production overhead is absorbed at 200% of direct labor costs, which means it is 2 times the direct labor costs. Therefore, the production overhead is $3,840 x 2 = $7,680. The total production cost is the sum of the cost of materials, direct labor costs, and production overhead, which is $9,000 + $3,840 + $7,680 = $16,800. Therefore, the correct answer is C $16,800.

Explanation

The full production cost of completed units during November can be calculated by adding the cost of materials, direct labor costs, and production overhead. The cost of materials is given as $9,000. The direct labor costs are given as $3,840. The production overhead is absorbed at 200% of direct labor costs, which means it is 2 times the direct labor costs. Therefore, the production overhead is $3,840 x 2 = $7,680. The total production cost is the sum of the cost of materials, direct labor costs, and production overhead, which is $9,000 + $3,840 + $7,680 = $16,800. Therefore, the correct answer is C $16,800.

10. A company uses process costing to establish the cost per unit of its output.The following information was available for the last month:Input units 10,000Output units 9,850Opening inventory 300 units, 100% complete for materials and70% complete for conversion costsClosing inventory 450 units, 100% complete for materials and30% complete for conversion costsThe company uses the weighted average method of valuing inventory.What were the equivalent units for conversion costs?

A 9,505 units

B 9,715 units

C 9,775 units

D 9,985 units

The equivalent units for conversion costs can be calculated by considering the percentage of completion of the opening and closing inventories. The opening inventory was 70% complete for conversion costs, which means 0.7 * 300 = 210 equivalent units. The closing inventory was 30% complete for conversion costs, which means 0.3 * 450 = 135 equivalent units. The equivalent units for conversion costs is the sum of the opening and closing inventory equivalent units, which is 210 + 135 = 345 units. The total equivalent units for conversion costs is then calculated by subtracting the closing inventory equivalent units from the output units, which is 9,850 - 345 = 9,505 units. Therefore, the correct answer is D 9,985 units.

Explanation

The equivalent units for conversion costs can be calculated by considering the percentage of completion of the opening and closing inventories. The opening inventory was 70% complete for conversion costs, which means 0.7 * 300 = 210 equivalent units. The closing inventory was 30% complete for conversion costs, which means 0.3 * 450 = 135 equivalent units. The equivalent units for conversion costs is the sum of the opening and closing inventory equivalent units, which is 210 + 135 = 345 units. The total equivalent units for conversion costs is then calculated by subtracting the closing inventory equivalent units from the output units, which is 9,850 - 345 = 9,505 units. Therefore, the correct answer is D 9,985 units.