- 20 Marks
Question
ME & YOU Limited operates two processes for the production of a single product. The output of the product ME is used as the input of process YOU. Five percent of each of the input is declared as normal loss with no value in process ME and N2.00/litre in process YOU. The following data was extracted from the company‟s record for the period just ended.
| ME | N |
|---|---|
| Raw material 200,000 litres @ N5/litre | 1,000,000 |
| Labour | 400,000 |
| Overheads | 310,000 |
| Output | 195,000 litres |
| YOU | |
|---|---|
| Input from ME | 195,000 litres |
| Additional Materials | 275,000 |
| Additional Labour | 269,500 |
| Additional Overhead | 220,875 |
| Output | 185,000 units |
Prepare the process account for ME and YOU showing all workings.
Answer
ME and YOU
PROCESS ME
Liters ₦
Litres ₦ Material 200,000 1,000,000 Good Production 195,000 1,755,000 Labour
400,000 Normal Loss 10,000
Overhead
310,000
Abnormal gain 5,000 45,000
205,000 1,755,000 205,000 1,755,000
Valuation of Good Units = 1,000,000+400,000+310,000/190,000
= 1,710,000/190,000
= ₦9.00 Good production = 195,000 x 9 = 1,755,000
PROCESS YOU
Litres ₦
Litres ₦ Transfer from ME 195,000 1,755,000 Good Production
185,000 2,497,500
Materials 275,000 Normal Loss 9750 19,500 Labour 269,500 Abnormal loss 250 3,375 Overhead 220,875
195,000 2,520,375
195,000 2,520,375
Valuation of Good Units = 2,520,375– 19,500 =13.50
185,250
- Topic: Process Costing
- Series: Nov 2024
- Uploader: Salamat Hamid