KK Ltd manufactures a product that passes through two distinct stages i.e A and B. The following
Question:
KK Ltd manufactures a product that passes through two distinct stages i.e A and B. The following data relates to the month of April 2017.
Process A;
Amount of materials introduced to the process 20,000 kgs@ $1,000
Direct Labour costs $17,000,000
Overhead Costs $20,800,000
The company expects to register output of 95% of input and plans to dispose off any scrapped units at $800 each. At the end of the process, the company registered actual loss of 1,600 kgs and output is transferred to the next process.
Process B;
The following conversion costs are incurred:
Direct labour hours required amounted to 1,550 at a rate of $10,000 per hour.
Additional material costs $11,635,000
Overheads are usually absorbed on the basis of direct labor hours at a rate of $300 per hour.
The company expects a normal loss of 10% of input and a registered actual output of 17,200 kgs. Scraped units are sold to poultry farmers at $1,000 each.
No beginning and closing inventory is registered at any process.
Required;
Prepare Process account and other relevant accounts.
Managerial Accounting
ISBN: 978-0697789938
13th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer