Problem:
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Process 1
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Process 2
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Materials per unit
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2 kilos
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3 liters
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Cost of materials per kilo/liter
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$ 2.50
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$ 1.50
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Materials used in process at cost
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$ 4000
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Additional materials used in process
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To be calculated
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Direct labour per unit
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2 hours
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45 minutes
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Labour cost per hour
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$ 14
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$ 12
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Variable over head per unit
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$ 3 per direct labour hour
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$ 2 per direct labour hour
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Fixed overhead absorption
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$ 4.50 per direct labour hour
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$ 9 per direct labour hour
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Further information;
Process 1: There were no opening or closing stocks of work in progress. All production from this process was passed to Process 2.
Process 2.There was no opening stock or work in progress. There was a closing stock of work in progress consisting of 500 units, which ere complete as to 80 percent of materials and 60 per cent of labour.
Required:
(a) Prepare the accounts for Processes 1 and 2
(b) Calculate the cost of
(i) One completed unit of production in Process 1.
(ii) One competed unit of production in Process 2.
(iii) One unit of work in progress in process 2.
6ooo units from Process 2 were used in Process 3. As a result of which two joint products X and Y were produced. The costs of this process were as follows.
Materials $4525;labour $9250; variable overheads $2700;fixed overheads $5400. 10 percent of production in Process 3 was spoiled. X represented 75 percent of the good production, and Y the remainder. There were no opening or closing stocks of work in progress.
Required.
(c) Calculate the quantities of (i) X and (ii) Y produced in Process 3.
(d) Calculate the cost of each unit of output of Process 3.
(e) Calculate the values of the finished stocks of (i) x and (ii) Y