Munkoyo Ltd, a company based in Kasama, manufactures a variety of sweet beer which passes through a number of processes. One of Munkoyo’s products, the morning fresh, passes through processes 1,2 and 4 before being transferred to finished goods warehouse. For process 4, the following data is available for the month of November 2023: Work in progress, November 1, 2023: 3,000 litres, costing K38,800 Degree of completion: Direct materials added 60% Direct labour and overheads 40% Transferred from process 2; 24,000 units at K4.60 per litre Transferred to finished goods; 23,250 litres Incurred: Direct materials added K54,360 Direct labour K36,480 Production overheads K72,960 Work in progress, 30 November, 2013; 2,000 litres complete as: Direct material added 50% Direct labour and production overhead 30% Normal loss in process is 6% of units in opening work in progress plus transfers from process 2 less closing work in progress. At a certain stage in the process, it is convenient for the quality control inspector to examine the product and where necessary reject it. Rejected products are sold for K1.90 per litre. During November, 2013, an actual loss of 7% was incurred with the product having reached the following stage of production: Direct material added 80% Direct labour and production overhead 60% Required: (a) Prepare the process 4 account for the month of November, 2023. (b) Prepare the abnormal loss /gain account for the month of November, 2023.
Munkoyo Ltd, a company based in Kasama, manufactures a variety of sweet beer which passes through a number of processes. One of Munkoyo’s products, the morning fresh, passes through processes 1,2 and 4 before being transferred to finished goods warehouse.
For process 4, the following data is available for the month of November 2023:
|
Work in progress, November 1, 2023:
|
3,000 litres, costing K38,800 |
|
Degree of completion: |
|
|
Direct materials added |
60% |
|
Direct labour and |
40% |
|
Transferred from process 2; |
24,000 units at K4.60 per litre |
|
Transferred to finished goods; |
23,250 litres
|
|
Incurred: Direct materials added |
K54,360 |
|
Direct labour |
K36,480 |
|
Production overheads |
K72,960 |
|
Work in progress, 30 November, 2013; |
2,000 litres complete as: |
|
Direct material added |
50% |
|
Direct labour and production overhead
|
30% |
|
Normal loss in process is 6% of units in opening work in progress plus transfers from process 2 less closing work in progress. |
|
|
|
|
At a certain stage in the process, it is convenient for the quality control inspector to examine the product and where necessary reject it. Rejected products are sold for K1.90 per litre. During November, 2013, an actual loss of 7% was incurred with the product having reached the following stage of production:
|
Direct material added |
80% |
|
Direct labour and production overhead |
60% |
Required:
(a) Prepare the process 4 account for the month of November, 2023.
(b) Prepare the abnormal loss /gain account for the month of November, 2023.
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