Question One

You have been hired as a consultant by DWK consults & upon learning that you did a course in Cost & Management Accounting the Managing Director has requested you to prepare a presentation for a training to be held in two weeks time and has requested you to focus on the following key issues;

Determinants of costing methods Explanation of different Specific order costing methods giving an illustrative example for each method Explanation of Continuous/process costing giving an illustrative example Meaning of by product & Joint product clearly giving the distinguishing features of joint products & by products Accounting for by products & Joint products

You are required to be brief and precise

Question Two

A product passes through three processes to completion. In the month of June, the costs of production were as follows:

Cost Element	Total Costs	Processes
		1	2	3
Additional Materials	8,432	2,000	3,020	3,462
Direct Labour	12,000	3,000	4,000	5,000
Direct Expenses	726	500	226	-

Production Overheads are $6,000. 1,000 units at $5 are introduced to process 1 and the output of each process is as follows: Process 1; 920 units, Process 2; 870 units, and Process 3; 800 units

The company expects a normal loss of 10%, 5%, and 10% of input for processes 1, 2, and 3 respectively. The loss in each process is represented with scrap which is sold to a piggery farm owner at $3 per unit, $5 per unit, and $6 per unit for processes 1, 2, and 3 respectively.

Production overheads are absorbed in process on the basis of 50% of the cost of direct labour.

No beginning and closing inventory is registered.

Required;

Prepare process accounts and other relevant accounts.

Question Three

KK Ltd manufactures a product that passes through two distinct stages i.e A and B. The following data relates to the month of April 2017.

Process A;

Amount of materials introduced to the process 20,000 kgs@ $1,000

Direct Labour costs $17,000,000

Overhead Costs $20,800,000

The company expects to register an output of 95% of input and plans to dispose off any scrapped units at $800 each. At the end of the process, the company registered actual loss of 1,600 kgs and output is transferred to the next process.

Process B;

The following conversion costs are incurred:

Direct labour hours required amounted to 1,550 at a rate of $10,000 per hour.

Additional material costs $11,635,000

Overheads are usually absorbed on the basis of direct labour hours at a rate of $300 per hour.

The company expects a normal loss of 10% of input and registered actual output of 17,200 kgs. Scraped units are sold to poultry farmers at $1,000 each.

No beginning and closing inventory is registered at any process.

Required;

Prepare Process account and other relevant accounts.

END