(a) (a) Defi ne the following terms used in process costing: (i) Normal loss (ii) Abnormal...

 

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(a) (a) Defi ne the following terms used in process costing: (i) Normal loss (ii) Abnormal loss (iii) Abnormal gain (b) Explain how each term is treated in the process accounts. (c) Explain the difference between a 'joint product' and a 'by-product'. (d) List three methods that are commonly used to apportion joint processing (6 marks) (6 marks) (4 marks) costs. (3 marks) (e) A company produces two joint products, Alpha and Beta, from the same process. Joint processing costs of N$300,000 are incurred up to split-off point, when 200,000 units of Alpha and 100,000 of Beta are produced. The selling prices at split-off point are N$2.50 per unit for Alpha and N$4 per unit for Beta. The units of Alpha could be processed further to produce 120,000 units of a new product, Delta, but at an extra fixed cost of N$40,000 and variable cost of N$0.30 per unit of output of Alpha. The selling price of Delta would be N$6.50 per unit. It is assumed that all units will be sold. Required: Calculate whether the company should sell either Alpha or Delta. (6 marks) (a) (a) Defi ne the following terms used in process costing: (i) Normal loss (ii) Abnormal loss (iii) Abnormal gain (b) Explain how each term is treated in the process accounts. (c) Explain the difference between a 'joint product' and a 'by-product'. (d) List three methods that are commonly used to apportion joint processing (6 marks) (6 marks) (4 marks) costs. (3 marks) (e) A company produces two joint products, Alpha and Beta, from the same process. Joint processing costs of N$300,000 are incurred up to split-off point, when 200,000 units of Alpha and 100,000 of Beta are produced. The selling prices at split-off point are N$2.50 per unit for Alpha and N$4 per unit for Beta. The units of Alpha could be processed further to produce 120,000 units of a new product, Delta, but at an extra fixed cost of N$40,000 and variable cost of N$0.30 per unit of output of Alpha. The selling price of Delta would be N$6.50 per unit. It is assumed that all units will be sold. Required: Calculate whether the company should sell either Alpha or Delta. (6 marks)

Answer rating: 100% (QA)

a i Normal loss It is the loss that arises due to the nature of the production process and is inevit... View the full answer