Question

Majority of this question is already done a -d only need the answer for e.. do only E

The MC Company manufactures electric bills. Material is introduces at the beginning of the process in the assembly department. Conversion cost are applied uniformly throughout the process. As the process is completed, goods are immediately transferred to the finishing department.

Data for the assembly department for the month of July 2016:

Work in process , June 1 $175500(consisting of 138,000 material and 37500 conversion cost) 100% completed for direct material ,but only 25% completed for conversion cost 10,000 units

Unit stated during july 80,000 units

Unit completed during july 70,000 units

Work in process july 1:100% completed for direct material but only 50% completed for conversion costs 20,000 units

Direct material added during july $852,000

Conversion cost added during july $634,500

Required :

a Prepare a production cost report using weighted average method?

b .Prepare the process account for the assembly department?

c.If the FIFO method was used instead of the weighted average what would be the units for the SCDP?

d.Explain the following terms: normal losses ,abnormal loss and abnormal gain

e.Consider the cooking department of AD food ltd :during May 3000 unit valued at 400500 were transferred from process 1 to process 2:other cost incurred during the month were:

Direct material added: $120,000

Direct labour: $130,000

Production overhead $97,000

400 units were scrapped during the period, normal losses were estimated to be 8 1/3 % of the input during the period. The scrap value of any loss is $32.00 per unit.

e i. Calculate the normal loss units and value

e. iiCalculate the abnormal loss/gain units

Answer 1

Answer to e.

First we need to calculation of units

Units	3000
Normal [email protected]%	249.9
rounded off	250
Actual loss	400
Abnormal Loss	150	(450-250)

So answer to e i. is 250 units

and as normal loss is already anticipated so other costs are not allocated to normal loss, since here we have the scrap value so the value of loss units will be 250*32= $8000

answer to your e ii. is 150 units as abnormal loss units

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