2 A concentrated liquid fertilizer is manufactured by passing chemicals through two consecutive processes.

Stores record cards for the chem1cal mgredients used exclusively by the first process show the following data for May 1979:

Other process data for May is tabulated below:

In process 1 the closing stock of work in process has JUSt passed through inspection. wh1ch is at the stage where materials and conversion costs are 100% and 75% completed respectively.
In process 2 inspection is the final operation.
Required:
(a} Prepare the relevant accounts to show the results of the processes for May 1979 and present a detailed working paper showing your calculations and any assumptions in arriving at the data shown in those accounts.

(b) If supplies of the required chemicals are severely restricted and all production can be sold immediately, briefly explain how you would calculate the total loss to the company if, at the beginning of June. 100 litres of the correct mix of chemicals were spilt on issue to process 1

Transcribed Image Text:

Opening stock Closing stock Receipts into store 4000 litres 10 800 8000 litres 24 200 20 000 litres 61 000