Page 160 - Microsoft Word - 00 ACCA F2 Prelims.docx
P. 160
Chaptter 9
7.1 Different deegrees of completioon
A proceess involvees direct mmaterials annd converssion costs ((direct laboour and
overheads).
Usuallyy, all the mmaterial is pput in at thee beginningg of the process, wheereas the
converssion is ‘addded’ as thee product aadvances tthrough thee process. This meanns
there mmay be a different ammount of eqquivalent units for connversion and materiaals i.e.
differennt degrees of compleetion.
A stepp by step aapproach iss:
BBalance thhe units (there will bee no lossess in the queestions youu are set).
CCalculate tthe EU for each elemment of cosst – materiaal, labour aand overheeads.
CCalculate ttotal costs for each eelement of cost – matterial, laboour and
ooverheadss.
CCalculate ccost per EUU for each element oof cost.
CCalculate tthe value oof the outputs
154