How often Process and joint product costing is asked

Where it was asked

• Oct/Nov 201420 marks
• Oct/Nov 201317 marks
• May/Jun 201319 marks

The questions

1. Oct/Nov 2014, Q4(a)6 marks

   Mathembu Daniels (Pty) Ltd produces whisky using a process costing system. Raw materials are introduced at the start of the process, while conversion costs are incurred evenly throughout the process. For May 2014, the opening work-in-progress (WIP) stood at 70 000 units, 20% complete, with associated costs of R325 000 for material and R128 000 for conversion costs (CC). During the month, 150 000 units were put into production, incurring further costs of R560 000 for material and R1 800 000 for conversion costs. By month-end, 190 000 units had been completed and transferred out, while 25 000 units remained in closing WIP, which was 90% complete. Normal wastage is set at 4% of the units that reach the wastage point, and this wastage occurs at the end of the process. The company applies the FIFO method for inventory valuation. Using the May 2014 information for Mathembu Daniels (Pty) Ltd's whisky process (opening WIP of 70 000 units at 20% completion, 150 000 units put into production, 190 000 units completed and transferred, and 25 000 units in closing WIP at 90% completion, with normal wastage of 4% of units reaching the wastage point at the end of the process, valued under FIFO), prepare the quantity statement for the scenario.

2. Oct/Nov 2014, Q4(b)2 marks

   Mathembu Daniels (Pty) Ltd produces whisky using a process costing system. Raw materials are introduced at the start of the process, while conversion costs are incurred evenly throughout the process. For May 2014, the opening work-in-progress (WIP) stood at 70 000 units, 20% complete, with associated costs of R325 000 for material and R128 000 for conversion costs (CC). During the month, 150 000 units were put into production, incurring further costs of R560 000 for material and R1 800 000 for conversion costs. By month-end, 190 000 units had been completed and transferred out, while 25 000 units remained in closing WIP, which was 90% complete. Normal wastage is set at 4% of the units that reach the wastage point, and this wastage occurs at the end of the process. The company applies the FIFO method for inventory valuation. Based on the same May 2014 data for Mathembu Daniels (Pty) Ltd (material costs of R325 000 for opening WIP and R560 000 added during production; conversion costs of R128 000 for opening WIP and R1 800 000 added during production), prepare the production cost statement for the scenario.

3. Oct/Nov 2014, Q4(c)6 marks

   Mathembu Daniels (Pty) Ltd produces whisky using a process costing system. Raw materials are introduced at the start of the process, while conversion costs are incurred evenly throughout the process. For May 2014, the opening work-in-progress (WIP) stood at 70 000 units, 20% complete, with associated costs of R325 000 for material and R128 000 for conversion costs (CC). During the month, 150 000 units were put into production, incurring further costs of R560 000 for material and R1 800 000 for conversion costs. By month-end, 190 000 units had been completed and transferred out, while 25 000 units remained in closing WIP, which was 90% complete. Normal wastage is set at 4% of the units that reach the wastage point, and this wastage occurs at the end of the process. The company applies the FIFO method for inventory valuation. For Mathembu Daniels (Pty) Ltd's May 2014 whisky process, where normal wastage amounts to 4% of the inputs reaching the wastage point (which occurs at the end of the process), calculate the Rand value of the normal loss and allocate it appropriately for purposes of the cost allocation statement of the scenario.

4. Oct/Nov 2014, Q4(d)6 marks

   Mathembu Daniels (Pty) Ltd produces whisky using a process costing system. Raw materials are introduced at the start of the process, while conversion costs are incurred evenly throughout the process. For May 2014, the opening work-in-progress (WIP) stood at 70 000 units, 20% complete, with associated costs of R325 000 for material and R128 000 for conversion costs (CC). During the month, 150 000 units were put into production, incurring further costs of R560 000 for material and R1 800 000 for conversion costs. By month-end, 190 000 units had been completed and transferred out, while 25 000 units remained in closing WIP, which was 90% complete. Normal wastage is set at 4% of the units that reach the wastage point, and this wastage occurs at the end of the process. The company applies the FIFO method for inventory valuation. Using all the information provided for Mathembu Daniels (Pty) Ltd's May 2014 whisky production process (including the quantity statement, production cost statement and the allocated normal loss value), prepare the cost allocation statement for the scenario.

5. Oct/Nov 2013, Q1.62 marks · multiple choice

   The following data relates to two joint products, Isitya and Ikopi. For Isitya: sales at the split-off point are R120 000, sales after further processing are R190 000, the joint cost allocated up to the split-off point is R50 000, and further processing costs are R30 000. For Ikopi: sales at the split-off point are R90 000, sales after further processing are R150 000, the joint cost allocated up to the split-off point is R35 000, and further processing costs are R30 000. Based on this information, which product(s) should be sold at the split-off point and which product(s) should be sold after further processing? A. Isitya: split-off point; Ikopi: split-off point; B. Isitya: further process; Ikopi: split-off point; C. Isitya: split-off point; Ikopi: further process; D. Both Isitya and Ikopi must be processed further.