By product is treated as reduction of cost and needs further processing at a

By product is treated as reduction of cost and needs

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scrap losses in process 2 is normally 10% of its production. By-product is treated as reduction of cost and needs further processing at a cost of RM2.50 per kg before it can be sold in the market. Weighted Average Cost Method is adopted for valuation of work in progress. During the month of December 2018, the following data are obtained from Process 2: INPUT RM Transfer from process 1 (40,000 kg) 240,000 Material added (30,000 kg) 240,000 Conversion costs 160,000 Opening work in progress (5,000 kg): Process 1 28,500 Material added 36,000 Conversion costs 19,778 OUTPUT KG Closing work in progress 7,000 Degree of completion: Material added - 80% Conversion costs - 60% Actual Scrap 7,000 By product (Kenanga) 500 Mawar 21,500 Cempaka 25,000 Seroja 14,000 The market values for the three main products are: Mawar RM16.00 per kg Cempaka RM21.00 per kg Seroja RM13.00 per kg It is the c ompany’s policy to adopt final sales value method for the apportionment of the joint cost. Required: a. Prepare Process 2 Account and the following statements for the month of December 2018: i. Statement of Equivalent Units ii. Statement of Cost per Unit iii. Statement of Evaluation iv. Statement of Joint Costs Apportion (25 marks)
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4 b. Calculate the net profit for the main products. (3 marks) c. Differentiate between joint products and by-product. (2 marks) (Total: 30 marks)
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