QUESTION 15

The following data relate to Process 2 of Danvee Ltd, a camera film manufacturer, for the

financial year ended 31 December 2020.

At the beginning of the year, there were 800 units partly completed which had the following

values:

Value GHC

Percentage complete

Input material (from process 1)

8,200

100

Material introduced

5,600

55

Labour

3,200

60

Overheads

2,400

45

During the period, 4300 units were manufactured from Process 1 at a value of GHC46,500.

Other costs were:

GHC

Material introduced

24,000

Labour

19,500

Overheads

18,200

At the end of the year, the closing WIP was 600 units which were at the following stages of

completion:-

Input material

-

100% complete

Material introduced -

50% complete

Labour

-

45% complete

Overheads

-

40% complete

The balance of 4500 was transferred to finished goods.

Required:

(i) Calculate the value of units transferred to finished goods and the value of WIP using the

FIFO method.

(ii) Prepare the Process 2 Account using the FIFO method

(iii) Discuss three ways in which the proceeds from the sale of By-products can be treated