Tutorial Chpt 2

7/30/2019 Tutorial Chpt 2

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QUESTION 1 (JAN2012)

Qasih Alya Bhd is a company which produces air-fresheners. One of the products, AirWock needs to undergo two processes, known as Process 1 and Process 2.

The followings are the information regarding the two processes:

Process 1Raw materials 7,500 kg @ RM5.00 per kgDirect labour 1,000 hours @ RM8.00 per hourDirect expenses RM2,500Output 6,000 kg

Process 2Additional raw materials RM7,500Direct labour 1,500 hours @ RM5.00 per hourDirect expenses RM4,000

Finished goods 7,500 kg

Additional Information:

1. Overhead charged for the department is RM10,000 which is to be apportionedbetween the two processes based on the direct labour hours.

2. Normal loss for each process is estimated at 5% of input.

3. The scrap value of the loss from Process 1 is RM1.00 per kg, but loss from Process2 has no value.

Required:

a) Prepare the following accounts:

i. Process 1 accountii. Process 2 accountiii. Normal loss account, Abnormal loss or Abnormal gain account (if any)

(16 marks)

b) Explain the differences between normal loss and abnormal loss.(4 marks)

(Total: 20 marks)


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QUESTION 2

Gyro Sdn Bhd manufactures a range of cleaning products including a high quality detergent,Supershine, which passes through 2 processes before completion. For the month ofSeptember 2011, data relating to this product is given below:

Process 1

Direct material (20,000 units) RM33,000Direct expenses RM3,000Direct wages (1600 hours @RM5) RM8,000Output (unit) 18,500Normal output 95% of input

Process 2

Materials added RM19,000

Direct expenses RM1,900Direct wages (2400 hours @ RM5) RM12,000Output (unit) 16,600Normal output 90% of input

Additional Information:

i. Total production overhead cost for the period is RM7,000 and is to be absorbed intoeach process based on direct labour hours.

ii. Losses have been identified to be incurred at the end of each process. All losses inProcess 1 and Process 2 are sold at RM0.50 and RM1.00 per unit respectively.

Required:

a) Prepare the following accounts:

i. Process 1 and Process 2 Accountsii. Normal Loss Accountiii. Abnormal Loss Account and/or Abnormal Gain Account

Note: Show all workings. Use four decimal places for price per unit.

(18 marks)

b) State two (2) reasons for abnormal loss.(2 mark)

(Total: 20 marks)


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QUESTION 3 (April 2011)

BenC Sdn Bhd manufactures tyre for car manufacturers in Malaysia. The tyres were madein a series of three process centers namely Process A, Process B and Process C. Below isthe relevant cost involved for March 2011:

i. In Process A, input of material is 40,000 kilograms at RM20 per kilogram, direct laborcost incurred was RM250,000, direct expenses RM160,000 and overhead costsamounted RM240,400.

ii. During Process B, material was added into the production amounted to RM350,000,direct labour cost incurred was RM250,000, direct expenses RM50,000 andoverhead cost RM84,580.

iii. In the final process, Process C there was no additional material, but direct labourcost incurred amounted to RM100,000, direct expenses RM50,000 and overheadcost RM66,600.

Based on previous experience, the company estimates normal losses as a percentage ofinput for each process as follows:

Normal Loss Scrap ValueProcess A 2% nilProcess B 4% RM10.00 per unitProcess C 5% RM20.00 per unit

The output for the processes is:

Process A 38,500 units

Process B 38,000 unitsProcess C 36,100 units

Required:

a) Prepare Process A account, Process B account and Process C account.(15 marks)

b) Prepare Abnormal Loss account and/or Abnormal Gain account.(2 marks)

c) State three (3) reasons for process losses.(3 marks)

(Total: 20 marks)

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Tutorial Chpt 2