Question
W Ltd. Chemicals process a range of products including a detergent Blasto, which passes through three processes before completion and transfer to the finished goods
W Ltd. Chemicals process a range of products including a detergent Blasto, which passes through three processes before completion and transfer to the finished goods warehouse. The following data relates to the month of April:
Process 1 Process 2 Process 3 Total
$ $ $ $
Direct material added in process 8,500 9,500 5,500 23,500
Direct wages 4,000 6,000 12,000 22,000
Direct expenses 1,200 930 1,340 3,470
Production overheads 16,500
Output (units) 9,200 8,700 7,900
Normal loss (% of input units) 10 5 10
Scrap value $0.20 $0.50 $1.00
10,000 units at $0.60 each were issued to process 1.
The production overheads are absorbed as a percentage of direct wages.
REQUIRED:
(a) Prepare the following accounts
i) Process 1
ii) Process 2
iii) Process 3
iv) Abnormal Loss
v) Abnormal Gain
vi) distinguish between abnormal loss and abnormal gain
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