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  • TRIAL1

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    David Dossou
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    The document contains three trial questions involving process costing. The first question provides cost and operating data for a company that produces wooden looms over two years and requires calculating unit costs and income statements using absorption and variable costing. The second question involves calculating process accounts, an abnormal loss account, and a scrap account for a three-stage production process with given normal wastage rates and sales values for wastage. The third question requires preparing process, abnormal gain/loss, and scrap accounts for a single-stage production process based on materials input, costs incurred, normal and abnormal losses, and degrees of completion for closing work-in-process and scrapped units.

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    Costing accounting

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    The document contains three trial questions involving process costing. The first question provides cost and operating data for a company that produces wooden looms over two years and requires calculating unit costs and income statements using absorption and variable costing. The second question involves calculating process accounts, an abnormal loss account, and a scrap account for a three-stage production process with given normal wastage rates and sales values for wastage. The third question requires preparing process, abnormal gain/loss, and scrap accounts for a single-stage production process based on materials input, costs incurred, normal and abnormal losses, and degrees of completion for closing work-in-process and scrapped units.

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    © All Rights Reserved
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    3 views2 pages

    TRIAL1

    Uploaded by

    David Dossou
    The document contains three trial questions involving process costing. The first question provides cost and operating data for a company that produces wooden looms over two years and requires calculating unit costs and income statements using absorption and variable costing. The second question involves calculating process accounts, an abnormal loss account, and a scrap account for a three-stage production process with given normal wastage rates and sales values for wastage. The third question requires preparing process, abnormal gain/loss, and scrap accounts for a single-stage production process based on materials input, costs incurred, normal and abnormal losses, and degrees of completion for closing work-in-process and scrapped units.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 2

    TRIAL

    1. Atua Afari company produces and sells a single product, a wooden hand loom for
    weaving small items such as scarves. selected cost and operating data relating to the
    product for two years are given below:
    $
    Selling price per unit 50
    Manufacturing costs:
    Variable per unit produced:
    Direct material 11
    Direct labour 6
    Variable o/h 3
    Fixed per year 120, 000

    Selling and admin costs:


    Variable per unit sold 5
    Fixed per year 70, 000

    Year 1 Year 2
    Units in beginning inventory 0 2,000
    Units produced during the year 10,000 6,000
    Units sold during the year 8,000 8,000
    Units in ending inventory 2,000 0

    NB: the normal capacity of Afua Afari company is 8000 units


    Required:
    i. Assume the company uses absorption costing; compute the unit cost in each
    year and prepare an income statement for each year
    ii. Assume the company uses variable costing; compute the unit cost in each year
    and prepare an income statement for each year

    2. A product passes through three processes A, B and C. The normal wastage of each process is
    as follows: Process A – 3 per cent, Process B – 5 per cent, and Process C – 8 per cent.
    Wastage of Process A was sold at 25 pesewas per unit, that of Process B at 50 pesewas per
    unit and that of Process C at GH₵1 per unit. 10,000 units were issued to Process A in the
    beginning of October 2017 at a cost of GH₵1 per unit. The other expenses were as follows:
    Process A Process B Process C
    Sundry materials (GH₵) 1,000 1,500 500
    Labour (GH₵) 5,000 8,000 6,500
    Direct expenses (GH₵) 1,050 1,188 2,009
    Actual output 9,500 units 9,100 units 8,100 units
    Required:
    Prepare the process accounts, the abnormal loss (gains) account and the scrap account
    3. C Ltd manufactures a range of products and the data below refer to one product which goes
    through one process only. The company operates a 13 four-weekly reporting system for
    process and products costs and the data given below relate to Period 10.

    There was no opening WIP stock.


    5,000 units of materials input at GH¢ 2.94 per unit entered the process.
    GH¢
    Further direct materials added 13,830
    Direct wages incurred 6,555
    Production overhead 7,470
    Normal loss is 3% of input.
    Closing WIP was 800 units but these were incomplete, having reached the following
    percentages of completion for each of the elements of cost listed:
    %
    Direct materials added 75
    Direct wages 50
    Production overhead 25
    270 units were scrapped after a quality control check when the units were at the following
    degrees of completion.
    %
    Direct materials added 662⁄3
    Direct wages 331⁄3
    Production overhead 162⁄3
    Units scrapped, regardless of the degree of completion, are sold for GH¢ 1 each and it is
    company
    policy to credit the process account with the scrap value of normal loss units.
    Required:
    i. Prepare the Period 10 process account.
    ii. Calculate the abnormal gain or loss account.
    iii. Scrap a/c

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