Question Six

Adem Plc is a manufacturer of 'Good Drive' an industrial lubricant, which is formed by subjecting certain crude chemicals to two successive processes. The output of process $1$ is passed to process $2,$ where it is blended with other chemicals. The process costs for the month ended ${31}^{st}$ December $2021$ were as follows:

Process $1$

Material: $3,000$ kilogram at a cost of $GH0\mathrm{.}25$ per kilogram.

Labour cost: GH$120\mathrm{.}00.$

Process plant time: $12$ hours at a cost of GH&$20$ per hour.

Output: $2,300$ kilogram.

Normal loss: $20\%$ of input.

Scrap value of the normal loss: GH$0\mathrm{.}20$ per kilogram.

Process $2$

Material: $2,000$ kilogram at a cost of GH$0\mathrm{.}40$ per kilogram.

Labour cost: GH&$84\mathrm{.}00.$

Process plant time: $20$ hours at a cost of $GH13\mathrm{.}50$ per hour.

Output: $4,000$ kilogram.

Normal loss: $10\%$ of input.

Note:

Scrap value of the normal loss: GH&$0\mathrm{.}30$ per kilogram.

$20\%$

i$.$ General overhead for the month amounted to GH&$357\mathrm{.}00$ and is absorbed into process costs on a process labour basis.

ii$.$ There was no stock or work in progress at either the beginning or the end of the period, and it may be assumed that all available normal losses had been sold at the

prices indicated.

Required; prepare for the month ended ${31}^{st}$ December $2021,$

a$)$ Process $1$ account

b$)$ Process $2$ account

d$)$ Normal loss account

e$)$ Abnormal loss account

f$)$ Abnormal gain account

TOTAL $(20$ MARKS$)$