PROCESS COSTING
RECAP
Rule 15.1 Units completed from opening WIP: 100% less % of completion (opening WIP)
Rule 15.2 Current production material 100%)
Rule 15.3 Closing WIP: % of completion at end of period)
Rule 16.1 If % of completion (opening WIP) is greater than or equal to the wastage point %,
deduct the opening WIP units from the input column total)
Rule 16.2 If % of completion (closing WIP) is smaller than the wastage point %, deduct the
closing WIP units from the input column total.)
Rule 16.3 If % of completion (opening WIP) is smaller than the wastage point, reduce the
units completed from opening inventory by the normal loss on these units)
Rule 16.4 Percentage to use in the conversion cost equivalent unit column if conversion
takes place evenly AND the normal and abnormal losses occur at the same wastage point:
Wastage point % (i.e % where the normal and abnormal losses takes place)
Percentages to use when calculating equivalent units for the normal losses for purposes of
the quantity statement is always 100% for material
Question 2 Motshoane (Pty) Ltd Jan/Feb 2020
Required
a) Quantity Statement weighted Average Method.
b) Production Costing Statement
a) Read question and information given
i) Weighted average method
ii) Process and conversion occur evenly throughout the process.
iii) Opening WIP = 55% ; Closing WIP = 70% and wastage point = 60%
iv) Normal loss 5%
v) Normal loss occurs when production is 60% complete
vi) Opening WP < wastage point therefore, Keep
vii) Closing WP> wastage point therefore, Keep
Quantity Statement Motshoane (Pty) Ltd November 2019
Physical Units Equivalent units
Input Details Output Raw Material Conversion units
units Input Units Units % units %
21 600 Opening WIP
96 000 Put into production
Output
Completed and 84 000 84 000 100% 84 000 100%
transferred
Normal loss (W1) 3 528 3 528 100% 2 117 60%
Abnormal loss 6 072 6 072 100% 3 643 60%
Closing WIP 24 000 24 000 100% 16 800 70%
117 600 117 600 117 600 106 560
W1
117 600 x 3%= 3 528
Opening WP 55% < 60% wastage point : keep
Closing WIP 70% > 60% wastage point: keep
Production Costing Statement
Total Material Conversion cost
R R R
Opening WIP 232 200 172 800 59 400
Current production cost 834 700 551 680 283 020
Total 1 066 900 724 480 342 420
Equivalent units- per quantity statement 117 600 106 560
Equivalent cost per unit R9.37 R6.16 R3.21
(c) FIFO Method
i) Assume normal loss occurs when process is 90% complete
Physical Units Equivalent units
Input Details Output Raw Material Conversion units
units Input Units Units % units %
21 600 Opening WIP
96 000 Put into production
Output
Completed from
Opening inventory 20 952 - 0% 9 428 45%
W1 W3
Current production 63 048 W2 63 048 100% 63 048 100%
Completed and 84 000 63 048 72 476
transferred
Normal loss 2 808 2 808 W4 100% 2 527 90%
Abnormal loss 6 792 W5 6 792 100% 6 113 90%
Closing WIP 24 000 W5 24 000 100% 16 800 70%
117 600 117 600 96 648 97 916
W1
Opening WIP 21 600 x 3%= 648
Opening WIP 55% < 90% wastage point
: Reduce
21 600 – 648= 20 952 W5 Abnormal loss: balancing figure. Closing
WIP: Given
W2
Completed units 84 000 – 20 952 opening units
63 048
W3 Conversion Opening WIP: 100%- 55%= 45%
W4 Opening WIP 55% <90% WP: Keep
Closing WIP 70%<90% WP: Deduct
(117 600 units – 24 000 c/s WIP) x 3%=2 808
Question 2 Marimba Sticks (Pty) Ltd Jan/Feb 2021
a) Weighted Average method
Physical Units Equivalent units
Input Details Output Raw Material Conversion units
units Input Units Units % units %
5 000 Opening WIP
70 000 Put into production
Output
Completed and 60 000 60 000 100% 60 000 100%
transferred
Normal loss (W1) 3 000 W1 3 000 100% 1 800 60%
Abnormal loss 9 800 9 800 100% 5 880 60%
Closing WIP 2 200 2 200 100% 1 320 60%
75 000 75 000 75 000 69 000
W1
Opening WIP 20% <60% WP: Keep
Closing WIP 60% =60% WP: Keep
75 000 units x 4% =3 000
b) Production Cost Statement
Total Material Conversion cost
R R R
Opening WIP 38 000 35 000 3 000
Current production cost 695 200 505 000 190 200
Total 733 200 540 000 193 200
Equivalent units- per quantity statement 75 000 69 000
Equivalent cost per unit R10.00 R7.20 R2.80
c) Ethics
i) Format can be asked as a memo; report; letter; email. Know the
structure/format
ii) To:
From: (don’t use real name)
Date: year given/ date given
Re: What is required
Respond- Table/ open paragraph (body to cover these)
• Issue
• Principle
• Application
• Conclusion
iii) Can use general knowledge to link with the question given
iv) For this question table is required
Identification Discussion
e. g. Child labour Marimba Sticks (Pty)Ltd is indirectly
affected by the irregularities of the
suppliers
Child labour is against is unethical
as it is exploitation of children and
deprives children of their childhood