A. Tmbe Limited manufactures various components. One of the components is EX which pass through two production cost centres (Filtering and Mixing) and several service cost centres.

The prime cost of product EX is as follows:

K per Unit

Direct materials 15

Direct labour

Filtering department 7

Mixing department 10.50

One unit of component EX takes 38.2 minutes in the Filtering Department and 52.5 minutes in the Mixing Department.

The Direct Labour is paid at K11 per hour and K12 per hour in the Filtering and Mixing Departments respectively.

Cost Centre Budgeted Overhead Budgeted Activity Actual Overhead Actual Activity

(K) (K)

Filtering 45 000 32 500 34 213 29 750

Machine Hours Machine Hours

Mixing 36 125 28 900 55 125 31 500

Direct Labour Hours Direct Labour Hours

Required:

(a) Calculate the overhead absorption rates for Filtering and Mixing Departments

(b) Calculate the over/under absorption of overheads in the two departments

c) Calculate the total production cost per unit of component EX (8 marks)

B. Kama Limited operates a processing costing system. All direct materials are added at the beginning of the process and conversion costs are added evenly during the process. The Management Accountant of Kama Ltd, has provided you with the following summary data for December.

Material added were 10 000 units costing K1 360 000

Labour cost was K1 284 000

Overheads was K1 172 000

9 000 units were completed during the month

It is company policy to allow 8% loss on inputs

Scrap value of the normal loss is K55 per unit

There is no opening or closing inventory to work-in-progress recorded.

Required

(a) Prepare for the month of December

(i) Process account

(ii) Normal loss (scrap) account

(iii) Abnormal loss/Abnormal gain account (12 marks