Well Done Sdn. Bhd. makes a product that has to pass through two manufacturing processes, I and II. All the materials is input at the start of Process I. No losses occur in Process I but there is a normal loss in Process II equals to 7% of the input into that process. Losses have no realisable value.

Process I is operated only in the first part of every month followed by Process II in the second part of the month. All completed production from Process I is transferred into Process II in the same month. There is no Work In Process (WIP) in Process II.

Information for last November for each process is as follows:

Process I

Opening WIP 200 units (40% complete for

conversion costs) valued in total at

RM16,500

Input into the process 1,900 units with a material cost of

RM133,000

Conversion costs incurred RM93,500

Closing WIP 50% complete for conversion

costs

Process II

Transfer from Process I 1,800 units

Conversion costs incurred RM78,450

Completed units 1,660 units

Calculate the value of abnormal loss of the Process II.

Question 9Answer

a. RM3,075

b. RM3,906

c. RM2,860

d. RM4,200