Management Accounting 2
Question 2
Jumco Limited, which uses process costing, manufactures a single product which passes through two processes, the output of process 1 becoming the input of process 2.
Normal losses and abnormal loss are defective units having a scrap value and cash is received at the end of the period for all such units. The following information relates to a four-week period:
18,000 units of raw material were issued to process 1 at a cost of €5.00 per unit. There was no opening or closing work in progress but opening and closing stocks of finished goods were €30,000 and €35,000 respectively.
Process 1 Process 2
Normal loss as a percentage of input 4.50% 6.00%
Output in units 17,150 16,150
Scrap value per unit – € 2.00 6.00
Direct wages incurred – € 15,000 25,000
Additional components – € 10,140 11,176
Production overhead as a percentage of
Direct wages 80% 45%
Required
Present the accounts for the following:
(a) Process 1
(b) Process 2
(c) Finished goods
(d) Normal loss
(e) Abnormal loss
(f) Abnormal gain
