QUESTION 3

A company produces a single product which passes through two processes; X and Y. The

normal level of loss and the scrap value of any loss is as follows;

Process X

Process Y

Normal loss as a percentage of input

10%

5%

Scrap value per kg

GH3

GH6

The actual data incurred for the month of January, 2021 is as follows;

Process X

Process Y

Output in kg

850

1,075

Direct materials introduced at start

of process

1,000kg @ GH3.3 per kg

250kg @ GH12 per kg

Direct labour

GH850

GH1,500

Direct expenses

GH750

GH1,510

Production overhead is absorbed on the basis of direct wages. The budgeted overheads for the

accounting year was GH56,000 and the budgeted direct labour was GH28,000. there were

no inventory of work-in-progress at the beginning or end of January, 2021.

You are required to prepare the accounts for:

(i) Each of the processes

(ii) Normal loss

(iii) Abnormal loss and / or gain