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Cost of Opening WIP:: Other Information

ZF Industries manufactures chemicals for pharmaceutical companies. The document provides information about the first production process for November 2020, including opening and closing work-in-process inventory levels, material and conversion costs incurred, output transferred to the next process, and normal losses expected. Additional information defines how factory overhead is applied and how inventories are valued. The second question details various financial transactions in November for Singer Ltd, a company that uses job order costing. This includes materials purchased and issued, payroll expenses, depreciation, property taxes, factory overhead applied, and cost of goods sold. Journal entries are required to record these transactions.

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Waseim khan Barik zai
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31 views2 pages

Cost of Opening WIP:: Other Information

ZF Industries manufactures chemicals for pharmaceutical companies. The document provides information about the first production process for November 2020, including opening and closing work-in-process inventory levels, material and conversion costs incurred, output transferred to the next process, and normal losses expected. Additional information defines how factory overhead is applied and how inventories are valued. The second question details various financial transactions in November for Singer Ltd, a company that uses job order costing. This includes materials purchased and issued, payroll expenses, depreciation, property taxes, factory overhead applied, and cost of goods sold. Journal entries are required to record these transactions.

Uploaded by

Waseim khan Barik zai
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Total Marks:28 Total Time:50mins

Question: 1

ZF Industries manufactures a special chemical that is used by pharma companies.


The following information relates to the first process for the month of November 2020:

Litres Rs.
Opening WIP-60% complete 1,500
Cost of opening WIP:
Material 750,000
Conversion Cost 660,000

Costs incurred during the month:


Direct Material 15,000 8,250,000
Direct Labour 5,250,000
Actual FOH 4,987,500

Output transferred to Process 2 12,250 -

Closing WIP-75% complete 1,700 -

Other Information:
-FOH is applied @ 100% of Direct Labour cost.
-Normal loss is expected at 10% of input during the month.
-Inspection for losses occur when the process is 65% complete.
-Scrap value for defective units is Rs. 150 per litre.
-ZF uses FIFO to value its inventories.

Required:
Work in Process account for Process 1 Marks:15

Question:2

During November, these transactions took place in Singer Ltd, a


company that uses job order costing:

(i) Materials purchased on account, Rs. 35,600

(ii) Materials issued: to fill requisitions on job orders Rs.25,250:


factory supplies,Rs.1,300.
(iii) Materials issued to complete defected units Rs.200.

(iv) Materials returned to the vendor Rs.225.

(v) Materials returned to the storeroom: from job orders,


Rs.1,090; factory supplies,Rs.125.

(vi) Total payroll was as follows;

Recorded liability for net pay to workers Rs.72,054.

Withheld tax, was Rs. 5,616.

(vii) The payroll was distributed as follows: direct labor, Rs.


66,870; indirect labor, balance of payroll.

(viii) Depreciation for the month: buildings,Rs.750;


machinery,Rs.800.

(ix) Property tax accrued Rs.750; insurance with a credit to the


prepaid account,Rs.850.

(x) Factory overhead is charged to production at a rate of


Rs.1.20 per direct labor hour. Records show 18,900 direct labor
hours worked during the month.

(xi) Close out the over-or under applied factory overhead to


cost of goods sold.

(xii) Cost of goods completed Rs.122,020.

Goods costing Rs. 108,300 were sold on account at a sales price of


Rs.159,750.

Required: Prepare relevant journal entries in the books of Singer


Ltd.
Marks:13

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