Question
The Caring Pharmaceutical manufactures a high-end after-shave lotion, called Masculine, in 10-ounce plastic bottles. The market for after-shave lotion is highly competitive. Thus, the company
The Caring Pharmaceutical manufactures a high-end after-shave lotion, called Masculine, in 10-ounce plastic bottles. The market for after-shave lotion is highly competitive. Thus, the company is very concerned about keeping its costs under control in order to remain its competitiveness.
The lotion passes through three processes: mixing, filling and corking. Materials are added at the beginning of each of the processes, and labor and overhead are incurred uniformly throughout each process. A partially completed production cost report for the month of May for the Mixing Department is shown below:
Particulars Units RM
Opening work-in progress 2,000
Materials (100%) 80,000.00
Labour (80%) 15,000.00
Overheads (80%) 45,000.00
Materials introduced 38,000 1,480,000.00
Direct Labour 350,000.00
Overheads 736,800.00
Units scrapped 3,000
Closing work-in progress 2,000
Materials (100%)
Labour and Overhead (80%)
Normal Loss is 5% of total output including opening work-in-progress. Units finished transferred to next process are 35,000 units. Scrapped units are realized at RM20.00 per unit.
Required:
Assume that Caring Pharmaceutical operates a weighted average stock management system, prepare:
a. the relevant statement for the mixing process.
b. the Mixing Process account for the period.
c. the Normal Loss Accounts
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