Can anyone help me wid this?
calculate d value of closing WIP by using FIFO & weighted avg method..
WIP(opening) degree of completion
1000 units
Raw material 100% Rs.5000
Wages 40% RS.2000
overhead 20% RS.1000
Fresh inputs 10000 units Rs.60000
wages Rs. 70000
overhead Rs.40000
closing WIP
1000 units
raw material 100%
wages 60%
overhead 30%
output 9900 units, normal loss 100 units
Ans should be :
FIFO 11418 WA 11282
| FIFO | 10963.3 | ||
| Mat | LAB | OV | |
| 60000/10900*1000 | 70000/11100*600 | 40000/11000*300 | |
| 5504.6 | 3783.8 | 1090.9 | 10379.3 |
| WA | |||
| Mat | LAB | OV | |
| 65000/10900*1000 | 72000/11100*600 | 41000/11000*300 | |
| 5963.3 | 3891.9 | 1118.2 | 10973.4 |
sachin bro is right
Valuation under FIFO method:
Per Unit Cost = expenses / weighted no. of unit produced
Weighted no. of unit produced;
for material = 10000
for wages = 600 (completed out of op. WIP) + 10000 - 400 (remained to be completed in cl. WIP) = 10200
for overheads = 800 + 10000 - 700 = 10100
valuation of overhead:
Material in cl. WIP = 60000/10000*1000 = 6000
Wages in cl. WIP = 70000/10200*600 = 4118
Overhead in cl. WIP = 40000/10100*300 = 1188
total value of cl. WIP = 11306.
Valuation under weighted average method:
Per Unit Cost = total expenses / weighted no. of total unit produced
Weighted no. of total unit produced;
for material = 1000 + 10000 - 100 = 10900
for wages = 1000 + 10000 - 400 (remained to be completed in cl. WIP) -100 = 10500
for overheads = 1000 + 10000 - 700 -100= 10200
valuation of overhead:
Material in cl. WIP = 65000/10900*1000 = 5963
Wages in cl. WIP = 72000/10500*600 = 4114
Overhead in cl. WIP = 41000/10200*300 = 1206
total value of cl. WIP = 11283 (or say 11282)
RECTIFICATION IN THE SOLUTION AS I DID NOT CONSIDERED NORMAL LOSS OF 100 UNIT.
Valuation under FIFO method:
Per Unit Cost = expenses / weighted no. of unit produced
Weighted no. of unit produced;
for material = 10000 - 100 = 9900
for wages = 600 (completed out of op. WIP) + 10000 - 400 (remained to be completed in cl. WIP) -100 = 10100
for overheads = 800 + 10000 - 700 -100 = 10000
valuation of overhead:
Material in cl. WIP = 60000/9900*1000 = 6060
Wages in cl. WIP = 70000/10100*600 = 4158
Overhead in cl. WIP = 40000/10000*300 = 1200
total value of cl. WIP = 11418.
Hi Anshu
As per ur calculation u didn't considared Normal Loss and Closing Stock in weighted no. of unit produced
I have considered it, please check...
moreover answer is also tallied.
| FIFO | 10963.3 | ||
| Mat | LAB | OV | |
| 60000/10900*1000 | 70000/11100*600 | 40000/11000*300 | |
| 5504.6 | 3783.8 | 1090.9 | 10379.3 |
| WA | |||
| Mat | LAB | OV | |
| 65000/10900*1000 | 72000/11100*600 | 41000/11000*300 | |
| 5963.3 | 3891.9 | 1118.2 | 10973.4 |
given answer is not always right
| Originally posted by : SACHIN KUMAR GARG | ||
 |
FIFO 10963.3 Mat LAB OV 60000/10900*1000 70000/11100*600 40000/11000*300 5504.6 3783.8 1090.9 10379.3 WA Mat LAB OV 65000/10900*1000 72000/11100*600 41000/11000*300 5963.3 3891.9 1118.2 10973.4 |
 |
can u tell me the followings:-
in case of FIFO method:
why u have included 1000 units of opeing WIP, in calculating Materail cost per unit? only 10000 units produced in current period less normal loss should be considered. (i.e. 10000-100 = 9900)
same in case of wages and overheads.
in case of weighted average method:
for wages: why u have considered 1000 units (some portion comleted in preceding period and some in current period) and also 600 units (portion incomlete out of preceding period in current year)? so u considered 600 units twice, i.e. included in 1000 units and 600 separately also.
same in case of overhead.
pls check the same.
Hi Anshu
yes ur right, i have done mistake in my calculation
NORMAL CAPACITY PRODUCTION 50000 UNITS PER YEAR AND PRODUCTION OVER HEAD FOR YEAR 350000 COST OF CONVERSION 10 LACS . UNITS REMAIN CLOSED FOR 2 MONTHS DUE TO LATE ORDER RECD.
1 FIND CLOSING STOCK VALUE FOR 6000 UNITS IF UNIT IDLE IS DUE TO NORMAL ANS 162000
2 VALUE OF 6000 UNITS IF UNIT CLOSING IS DUE TO ABNORMAL ANS 155000
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