MI - May 2015 - L1 - SB - Q2 - Costing Methods

MI – May 2015 – L1 – SB – Q2 – Costing Methods

Prepare process accounts, normal loss account, and abnormal gain account for Maputo Nigeria Limited for Process 2 and Process 3.

Question

MAPUTO NIGERIA LIMITED manufactures its product through three processes. The following data relates to Process 2 and Process 3 for the month of October:

100,000 units at N10 each were transferred from Process 1 to Process 2.

Cost Components	Process 2 (N)	Process 3 (N)
Direct Materials	100,000	114,000
Direct Labour	135,000	100,000
Variable Expenses	30,000	53,500
Production Overhead	250,000	200,000

Normal output: 90% for Process 2 and 80% for Process 3
Actual output: 85,000 units for Process 2 and 70,000 units for Process 3
Scrap value of loss: N3 per unit for Process 2 and N2 per unit for Process 3

Required:
a. Prepare Process 2 and Process 3 accounts (16 Marks)
b. Prepare the Normal Loss account (2 Marks)
c. Prepare the Abnormal Gain account (2 Marks)

Answer

MAPUTO NIGERIA LIMTED
PROCESS 2 ACCOUNTS