Question

GREEN Ltd makes a product that passes through two manufacturing processes. A normal loss equal to 8% of the raw material input occurs in Process ALPHA but no loss occurs in Process BETA. Losses have no realisable value. All the raw material required to make the product is input at the start of Process ALPHA. The output from Process ALPHA each month is input into Process BETA in the same month. Work in progress occurs in Process BETA only. Information for the month of February 2020 for each process is as follows:

Process ALPHA

Raw material input 50,000 litres at a cost of K365,000

Conversion costs K256,000

Output to Process BETA 47,000 litres

Process BETA

Opening work in progress 5,000 litres (40% complete for conversion costs) valued at K80,000

Conversion costs K392,000

Closing work in progress 2,000 litres (50% complete for conversion costs)

Required:

(a) Prepare the Process ALPHA account for last month. [5 Marks]

(b) Calculate in respect of Process BETA for last month:

(i) The value of the completed output; and

(ii) The value of closing work in progress. [5 Marks] [TOTAL: 10 MARKS]

Answer 1

(a) Preparation of Process ALPHA account for last month
Particulars	Unit	Total	Particulars	Unit	Total
To Raw Material	50,000	3,65,000	By Normal Loss	4,000	29,200
To Conversion Costs		2,56,000	By Transfer to Beta	47,000	6,04,665
To abnormal gain	1,000	12,865
	51,000	6,33,865		51,000	6,33,865

(b) Preparation of Process Beta account for last month
Particulars	Unit	Total	Particulars	Unit	Total
To Opening WIP (40% completed)	5,000	80,000	By Closing WIP (50% completed)	2,000	7,840
To Conversion Costs		3,92,000	By Closing Stock	50,000	10,68,825
To Trf from Alpha	47,000	6,04,665
	52,000	10,76,665		52,000	10,76,665
(i) Value of completed output	10,68,825
(ii) Value of Closing work in progress	7,840