Question

A company manufactures a product that goes through two processes. You are given the following cost information about the process for the month of November 2019.

	Process 1	Process 2
Inputs (units)	15,000	-
Finished input from process 1	-	10,000
Finished output in process 2	10,000	-
Finished unit output from process 2	-	9,500
Opening WIP – Units	-	2,000
Opening WIP - Value	-	GHS 26,200
Input – Material	GHS 26,740	-
- Labour	GHS 36,150	GHS 40,000
- Overhead	GHS 40,635	GHS 59,700
Closing WIP – Units	4,400	1,800

You are told:

1. The closing Work-In-Progress in process 1 was 80% complete for material, 50% complete for labor and 40% complete for overhead.
2. The opening Work-In-Progress was 40% complete for labour and 50% complete for overhead. It had a value of labour of GHS 3,200; and overhead of GHS 6,000 for work done in process 2
3. The closing Work-In-Progress was two-thirds complete for labour and 75% complete for overhead.
4. No further material needed to be added to the units transferred from Process 1.
5. Normal loss is budgeted at 5% of total input in Process 1 and Process 2. Total inputs is to be inclusive of any opening Work-In-Progress
6. Normal loss has no scrap value in Process 1 and can be sold for the input value from Process 1 and Process 2
7. Abnormal losses have no sales value
8. It is company policy to value opening WIP in a process by Weighted Average Method

You are required to prepare the following accounts for the period:

1. Process 1 Account
2. Process 2 Account
3. Normal Loss Account
4. Abnormal loss/gain account

Answer 1

Hi,

Please follw the steps to go through this solution

1. Workings showing equavalent units of production

2. Working showing per unit cost process wise

3. Ledger Accounts as asked in the problem

4. workings for valuation of closing stock