Anson Limited manufactures a single product, Product X, in two successive processes. The following information relates to the month of April 2000:

Note: The normal loss in Process 2 was detected at the end ofthe process, and was sold as scrap for £800 and was credited to Process 2. There was no abnormal loss in either process.
Required:

(a) For the month of April 2000 produce separately each of Process 1 and Process 2 ledger accounts. Your accounts should clearly show the values of goods transferred between processes and to finished goods stock and the value ofwork-in-progress. The accounts should also clearly show ‘units’ as well as values. (17 marks)

(b) Product X is sold for £350 per unit. It is possible to convert Product X into Product Y by way of a further process. The total cost of conversion would be £38 per unit input, but there would be a normal loss of 20% ofinput. Product Y could be sold for £450 per unit. Calculate the effect on the total profit of Anson Limited if it decided to convert the total production of Product X into Product Y

Transcribed Image Text:

Opening Work-in-Progress Materials input during month Additional materials Labour cost for month Production overhead cost for month Normal loss Transferred to Process 2 Transferred to Finished Goods stock Closing Work-in-Progress Process 1 Nil 500 units at a cost of 10,250 18,040 Process 2 Nil 400 units from Process 1 11,300 14,280 33,000 8,120 Nil 50 units 400 units 350 units Nil 100% complete for 100 units materials and 40% complete for conversion costs