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.

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