N12401 MAD II

Seminar 2 Part 1
Process Costing

Indicative Answers
Please check your work against these, we will discuss these during Seminar 2.
1
2
3
4
5
20.
(a)
(b)

A
C
C
B
C

6
7
8
9
10

D
D
C
D
B

11
12
13
14
15

C
B
B
C
A

16
17
18
19

B
B
A
C

Direct material cost per unit of output is $10 per unit

Conversion cost per unit of output is:
P1: $14 per unit
P2: $26 per unit

21.
(a)

Material 220,000; Conversion 214,000.

(b)

Material $2.94; Conversion $1.30.

(c)

22

Cost to be accounted for:

Work-in-process, 1 Nov
Cost added in Nov
Total cost

$98,000
$827,000
$925,000

Cost accounted for as follows:

Transferred to the next department
Work-in-process, 30 Nov
Total cost

$805,600
$119,400
$925,000

Answer should identify the benefits and drawbacks of the method, and point out its common
criticisms in that the figures computed for product costing purposes are averaging between the
previous period and the current period. Specifically, current performance should be measured in
relation to costs of the current period only, and evaluation of performance that is influenced to
some extent by what happened in a prior period will not be meaningful. Since the weightedaverage method mixes these costs in with costs of the prior period, the weighted average costs
should not be used to evaluate cost control or measure performance for the current period.