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Understanding Financial Statements

Purchased mat...

Question

Purchased materials are added in the second department of a three-department process; this does not increase the number of units produced in the second department and would ___________.

A

Not change the amount transferred to the next department

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B

Decrease total work in process inventory

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C

Increase the factory overhead portion of the ending work in process inventory

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D

Increase total unit cost

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Solution

The correct option is D Increase total unit cost
In process costing method, raw material added in first process passes through different stages through processes to reach to the finished goods. The quantity of raw material introduced in first process carried to the next process after deducting the normal or abnormal loss. Output of first process becomes the input of the second process and so on.
Material added in second process will not increase the number of units but this increases the total unit cost.

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Q. Purchased materials are added in the second department of a three-department process; this increases the number of units produced in the second department and would always _________.

Q. The system flow in which the initial raw materials are placed into process in the first department and flow through every department in the factory is called a _______.

Q. A firm manufactures two products, each of which must be processed through two departments, 1 and 2. The hourly requirements per unit for each product in each department, the weekly capacities in each department, selling price per unit, labour cost per unit, and raw material cost per unit are summarized as follows:

	Product A	Product B	Weekly capacity
Department 1	3	2	130
Department 2	4	6	260
Selling price per unit	Rs 25	Rs 30
Labour cost per unit	Rs 16	Rs 20
Raw material cost per unit	Rs 4	Rs 4

The problem is to determine the number of units to produce each product so as to maximize total contribution to profit. Formulate this as a LPP.

Q. Directions:- Study the following information carefully to answer the question given below.

A, B. C, D, E, F, G and H are eight persons working in three different departments viz operations, sales and finance of an organization with at least two and not more than three in any department. They are on three different scales viz. I, II and III with at least two in any one scale. Both the employees in operations department are in scale II. D works in Sales department and belongs to Scale I. A works in Finance department and does not belong to Scale I. Two employees in Sales department belong to one scale. F works with only H in one of the departments. C works with E in one of the departments. B does not work with either C or A in the same department. G does not belong to Scale III. E does not belong to Scale I.

Which of the following groups of employees work in sales department?

Q. Directions:- Study the following information carefully to answer the question given below.

A, B. C, D, E, F, G and H are eight persons working in three different departments viz operations, sales and finance of an organization with at least two and not more than three in any department. They are on three different scales viz. I, II and III with at least two in any one scale. Both the employees in operations department are in scale II. D works in Sales department and belongs to Scale I. A works in Finance department and does not belong to Scale I. Two employees in Sales department belong to one scale. F works with only H in one of the departments. C works with E in one of the departments. B does not work with either C or A in the same department. G does not belong to Scale III. E does not belong to Scale I.

Which of the following combinations is correct?

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