Luboil Ltd uses a process system to jointly produce its three main products, (Products A, B and
Question:
Luboil Ltd uses a process system to jointly produce its three main products, (Products A, B and C). By product D is also produced during the process. After split off, the three main products are filled into containers prior to sale whereas by-product D is sold direct with no additional cost.
Information regarding the joint process for the month of May is as follows:
Input Material y Material Z Direct labour 4,000 litres at £1.20 per litre 8,000 litres at £0.90 per litre 625 hours at £8.00 per hour Overheads are absorbed at £12 per direct hour Output Product Quantity Selling price per kg Product A Product B Product C By-Product D 3,600 litres 3,400 litres 3,000 litres 800 litres £5 per 1 litre container £15 per 5 litre container £30 per 10 litre container litre £1 per litre
Process losses (waste), which are as expected, are disposed of at a cost of £0.50 per litre.
Containers for the three products A, B and C cost £0.50, £1.00 and £2.00 each respectively. All containers can be filled at the rate of 200 litres per direct labour hour.
REQUIRED
(a) For the month of May, prepare the account for the joint process using each of the following methods of apportioning joint costs to products:
(i) Net sales value
(ii) Physical quantity.
(b) Define the terms normal loss, abnormal loss and abnormal gain and contrast briefly their accounting treatment.
Expert Answer:
Answer a i Process Account Net sales value basis Litres Product Litres Material Y 4000 4800 A 3600 1... View the full answer
Materials Science and Engineering An Introduction
ISBN: 978-0470419977
8th edition
Authors: William D. Callister Jr., David G. Rethwisch
