Monallissa plc processes and sells a single product. Purchases of raw material during the year were...

 

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Monallissa plc processes and sells a single product. Purchases of raw material during the year were made at a regular rate of 1,000 tons at the beginning of each week. The price was GHe 100 per ton on 1 January 2007 and was increased to GHe 150 per ton on 1 July 2007 remaining constant from then until the end of the year, 31 December 2007. In addition to this price a customs duty of GHe 10 per ton was paid throughout the year, and transport from the docks to the factory cost GHe 20 per ton. Variable costs of processing were GH¢25 per ton and the fixed production costs were GH¢30,000 per week. One ton of raw material is processed into one ton of finished product and sold, at a delivered price of GHe240 per ton. Average delivery costs to customers were GHe7.50 per ton. At the beginning of the year there were no stocks and at the end of the year there were 5.000 tons of raw material and 2,000 tons of finished product. It is expected that the costs and prices current at 31 December 2007 will continue during 2008. Requirements Draft an accounting policy statement on stock for the company to include in its annual (a) accounts. (b) Calculate the value of stock at 31 December 2008 using the FIFO basis under SSAP 9. Monallissa plc processes and sells a single product. Purchases of raw material during the year were made at a regular rate of 1,000 tons at the beginning of each week. The price was GHe 100 per ton on 1 January 2007 and was increased to GHe 150 per ton on 1 July 2007 remaining constant from then until the end of the year, 31 December 2007. In addition to this price a customs duty of GHe 10 per ton was paid throughout the year, and transport from the docks to the factory cost GHe 20 per ton. Variable costs of processing were GH¢25 per ton and the fixed production costs were GH¢30,000 per week. One ton of raw material is processed into one ton of finished product and sold, at a delivered price of GHe240 per ton. Average delivery costs to customers were GHe7.50 per ton. At the beginning of the year there were no stocks and at the end of the year there were 5.000 tons of raw material and 2,000 tons of finished product. It is expected that the costs and prices current at 31 December 2007 will continue during 2008. Requirements Draft an accounting policy statement on stock for the company to include in its annual (a) accounts. (b) Calculate the value of stock at 31 December 2008 using the FIFO basis under SSAP 9.

Answer rating: 100% (QA)

a The company will use the FIFO basis for valuing stock und... View the full answer