The product of Bhawan LLC passes through two distinct processes to completion. From the past experience the production manager ascertained that loss incurred for Process 1 and Process 2 is 5% and 4% respectively. The loss of each process possesses a scrap value. The loss of Process 1 and Process 2 are sold at RO 10 per 50 units.

	Process 1	Process 2
Material Consumed	RO 20,000	RO 70,000
Direct Labor	RO 1,000	RO 1,500
Manufacturing Expenses	RO 2,000	RO 1,250

Indirect expenses amounting to RO 10,000 may be apportioned on the basis of output of each process. 15,000 units have been issued to Process 1 at a cost of RO 15,000. The output of Process 1 is 14,000 and Process 2 is 13,600.

Production manager requested you to prepare process accounts, normal loss account and abnormal accounts. Calculations should be made to the nearest riyal.

After preparing the necessary accounts, MCQs 13, 14, 15 and 16 should be answered.

Question 13

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Identify the amount of abnormal loss shown in the process account of Bhawan LLC.

a.

RO 250

b.

RO 560

c.

RO 753

d.

RO 160

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Question 14

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Select the amount of abnormal gain shown in the Bhawan LLC process account.

a.

RO 1,452

b.

RO 560

c.

RO 1,425

d.

RO 160

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Question 15

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From the following choose the number of abnormal gain units allocated to the process account of Bhawan LLC.

a.

560 units

b.

250 units

c.

160 units

d.

750 units

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Question 16

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What is the amount transferred to costing profit & loss account in abnormal gain accounting.

a.

RO 32

b.

RO 1,339

c.

RO 1,425

d.

RO 1,393

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Question 17

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Isolating the causes of variance between actual and standard is called as

a.

Standard cost

b.

Standard costing

c.

Cost variance

d.

Variance analysis