Intermediate: Losses in process (weighted average)

(a) Outline the characteristics of industries in which a process costing system is used and give two examples of such industries.

(5 marks)

(b) ATM Chemicals produces product XY by putting it through a single process. You are given the following details for November.

You are also told the following:
(i) Normal loss is 4% of input.
(ii) Scrap value of normal loss is £2.00 per kilo.
(iii) Finished output amounted to 15 000 units.
(iv) Closing work in progress amounted to 6000 units and was fully complete for material | complete for labour and \ for overheads.
(v) There was no opening work in progress. Required:

(i) Prepare the Process account for the month of November detailing the value of the finished units and the work in progress. (12 marks)
(ii) Prepare an Abnormal Loss account.
(2 marks)
(c)Distinguish between normal and abnormal losses, their costing treatment and how each loss may be controlled.

Transcribed Image Text:

Input Costs Materials costs Labour costs Overhead costs 25 000 kilos at 2.48 per kilo 8000 hours at 5.50 per hour 63 000