ACCA/CAT's chat, Members/Affilates/Students 
Dec 8 2008, 05:29 PM
QUOTE(laysiew @ Oct 27 2008, 04:28 PM)
hi, i have some question but dunno how to solve it..
can anyone help me?tq..
the question as below:
Milo plc has a number of chemical processing plants in the UK. At one of these plants it takes an annual input of 400,000 gallons of raw material A and converts it into two liquid products,B and C.
the standard yield from one gallon of material A is 0.65 gallons of B and 0.3 gallons of C. product B is processed further, without vulome loss, and then sold as product D.Product C has hitherto been sold without further processing. in the year ended 31 July 2000, the cost a material A was RM20 per gallon. the selling price of product C was RM5 per gallon and transport costs from plant to customer were RM74,000.
Negotiations are taking place with Takeup Ltd who would purchase the total production of product C for the years ending 31July 2001 and 2002 provided it was converted to product E by further processing. it is unlikely that the contract would be renewed after 31 July 2002. new specialized transport costing RM120,000 and special vats costingRM80,000 will have to be acquired if the contract is to be undertaken. the vats will be installed in part of the existing factory that is presently unused and for which no use has been forecast for the next 3 years. both transport and vats will have no residual value at the end of the contract. the company uses straight line depreciation.
Projected data for 2001 and 2002 are as follows:
-----------------------------------------------------LIQUID A-----LIQUID D-----LIQUID E
Amount processed (gallons)---------------------400,000
Processing cost (RM):
-----Cost of liquid A per gallon--------------------------20
-----Wages to split-off (p.a.)----------------------400,000
-----Overheads to split-off (p.a.)-----------------250,000
-----Further processing cost:
----------Materials per gallon-------------------------------------------3.5------------3.30
----------Wages per gallon----------------------------------------------2.5------------1.70
----------Overheads (p.a.)-------------------------------------------52,000--------37,000
Selling cost (RM):
-----Total expenses(p.a.)---------------------------------------------125,000
-----Selling price per gallon (RM)--------------------------------------40,000---------15.50
Total plant administration cost are RM95,000 p.a.
you are required:
a) show whether or not Milo plc should accept the contract and produce liquid E in 2001 and 2002
b)Calculate, assuming that 10,000 gallons of liquid C remain unsold at 31 July 2000, and using the FIFO basis for inventory valuation, what would be the valuation of:
(i) The stock of liquid C, and
(ii)10,000 gallons of liquid E after conversion from liquid C.
FOR the question a),i did the income statement for the liquid C,but i dunno whether want to include the production costs which are material,wages and overhead costs coz it is not stated on the question but the liquid E having state those costs.izzit wanna to include those costs?
for the b) i really dunno how to do..can any one help me n teach me how to do it?
thanks u
Looks familiar...i think i did it be4 but lazy to read...can anyone help me?tq..
the question as below:
Milo plc has a number of chemical processing plants in the UK. At one of these plants it takes an annual input of 400,000 gallons of raw material A and converts it into two liquid products,B and C.
the standard yield from one gallon of material A is 0.65 gallons of B and 0.3 gallons of C. product B is processed further, without vulome loss, and then sold as product D.Product C has hitherto been sold without further processing. in the year ended 31 July 2000, the cost a material A was RM20 per gallon. the selling price of product C was RM5 per gallon and transport costs from plant to customer were RM74,000.
Negotiations are taking place with Takeup Ltd who would purchase the total production of product C for the years ending 31July 2001 and 2002 provided it was converted to product E by further processing. it is unlikely that the contract would be renewed after 31 July 2002. new specialized transport costing RM120,000 and special vats costingRM80,000 will have to be acquired if the contract is to be undertaken. the vats will be installed in part of the existing factory that is presently unused and for which no use has been forecast for the next 3 years. both transport and vats will have no residual value at the end of the contract. the company uses straight line depreciation.
Projected data for 2001 and 2002 are as follows:
-----------------------------------------------------LIQUID A-----LIQUID D-----LIQUID E
Amount processed (gallons)---------------------400,000
Processing cost (RM):
-----Cost of liquid A per gallon--------------------------20
-----Wages to split-off (p.a.)----------------------400,000
-----Overheads to split-off (p.a.)-----------------250,000
-----Further processing cost:
----------Materials per gallon-------------------------------------------3.5------------3.30
----------Wages per gallon----------------------------------------------2.5------------1.70
----------Overheads (p.a.)-------------------------------------------52,000--------37,000
Selling cost (RM):
-----Total expenses(p.a.)---------------------------------------------125,000
-----Selling price per gallon (RM)--------------------------------------40,000---------15.50
Total plant administration cost are RM95,000 p.a.
you are required:
a) show whether or not Milo plc should accept the contract and produce liquid E in 2001 and 2002
b)Calculate, assuming that 10,000 gallons of liquid C remain unsold at 31 July 2000, and using the FIFO basis for inventory valuation, what would be the valuation of:
(i) The stock of liquid C, and
(ii)10,000 gallons of liquid E after conversion from liquid C.
FOR the question a),i did the income statement for the liquid C,but i dunno whether want to include the production costs which are material,wages and overhead costs coz it is not stated on the question but the liquid E having state those costs.izzit wanna to include those costs?
for the b) i really dunno how to do..can any one help me n teach me how to do it?
thanks u
QUOTE(zane12 @ Nov 6 2008, 10:22 PM)
Do any1 know which institute/college provide CAT course in part time basis??
I think sunway does...GOOD LUCK TO ALL ACCA FOR DEC SITTING!!!
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