Product M is made by processing materials in three sequential processes, 1, 2 and 3. The details of the process cost for the financial period 2 were as follows:

	Process 1	Process 2	Process 3
	K	K	K
Direct material introduced (5000kg)	40 000
Direct material added	12 000	25 280	46 400
Direct labour	10 000	12 000	20 000
Direct expenses	8 000	12 400	8 160

Budgeted departmental overheads for period 2 were K168,000 and absorbed into the cost of each process on a percentage of Direct Labour Cost.

Output and normal loss data are as follows:
	Process 1	Process 2	Process 3
Actual Output	4 400 kg	4 200 kg	3 500 kg of
			product Simba
Normal loss	10%	5%	10%

Normal loss is a partially toxic material and is sold at K2, K6 and K10 in processes 1, 2 and 3 respectively.

There was no finished inventory at the beginning of the period and no work-in process at either the beginning or end of the period.

Required:

(a) Prepare process 1, 2 and 3 accounts

(b) Prepare abnormal losses and normal gain account showing balance to be transferred to the statement of comprehensive income account.

(c) Explain the distinction between a by-product and a joint product.