QUESTION ONE William Limited manufactures a unique hair oil branded Williamline. The product undergoes two...
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QUESTION ONE William Limited manufactures a unique hair oil branded Williamline. The product undergoes two manufacturing processes before emerging as a complete product. The following information relates to production undertaken during the month of September 2020. Process 1 2 Input 250,000 litres @ Sh. 62.50 per litre Added Costs: Material 5,750,000 4,606,250 Labour 4,812,500 3,806,250 Overhead 2,062,500 2,640,000 Normal loss 10% of input 5% of input Scrap value Sh. 18.75 per litre Sh. 42.50 per litre Output: To process 2:200,000 litres To finished goods To W.I.P CIF - Previous process costs - Added material - Labour - Overhead 162,500 litres 25,000 litres 100% 80% 70% 50% There was no opening work-in-progress in either of the two processes. Losses in process 2 had the following degree of completion: previous process costs 100%, added material 70%, labour 50% and overheads 50% Required: a) Process accounts for both processes for the month of September 2020 (show all your computations) (16 marks) b) Explain the implication of the following to the costs of equivalent units: i) Normal loss (2 marks) ii) Scrap value (2 marks) (Total: 20 marks)
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