Process Costing – NBC Institute

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

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Tags: Abnormal Gain, Manufacturing Costs, Normal Loss, Process Costing, scrap value
Level: Level 1

Topic: Process Costing
Series: MAY 2015

IMAC – July 2023 – L1 – Q1 – Cost-Volume-Profit (CVP) Analysis | Process Costing

Prepare the Process Account for Omicron vaccine production and calculate the break-even point and required units to achieve target profit before and after tax

Question

a) Adom Ltd manufactures Omicron vaccine for the treatment of COVID-19 in Africa. The manufacturing process uses two raw materials (M & W) which are mixed in the proportions (2:3). Materials are priced: M = GH¢10 per kg and W = GH¢3.2 per kg. Normal weight loss of 5% of material input is expected during the process, and material losses recorded in the manufacturing process have no saleable value. At the end of production, 18,260 kg of Omicron vaccine were manufactured from 19,320 kg of raw materials. Conversion costs in the period were GH¢57,316. There was no work in process at the beginning or end of the period.

Required:
Prepare the Process Account of the Omicron vaccine for the period. (10 marks)

b) Manna Industries sold 150,000 units of its product at GH¢20 per unit. Variable costs are GH¢15 per unit (manufacturing cost of GH¢12 and selling expenses of GH¢3). Fixed costs are incurred uniformly throughout the year and amount to GH¢972,000, that is, manufacturing costs of GH¢600,000 and selling expenses of GH¢372,000.

Required:
i) Calculate the break-even point in units and Ghana cedis. (4 marks)
ii) Calculate the number of units that must be sold to earn an income of GH¢75,000 before income tax. (2 marks)
iii) Calculate the number of units that must be sold to earn an after-tax profit of GH¢100,000 if the income tax rate is 40%. (4 marks)

Answer

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Tags: After-tax Profit, Break-even Analysis, Process Costing, Target Profit
Level: Level 1

Topic: Cost-Volume-Profit (CVP) Analysis, Process Costing
Series: JULY 2023

IMAC – April 2022 – L1 – Q3 – Cost Segregation and Estimation | Process Costing

Determination of prime and full costs of living room furniture and features of a process costing system.

Question

a) Frankadua Furniture Works located at Bomaa in the Ahafo Region has a rough estimate of the materials and labour cost of a set of living room furniture. It is expected that 8 cubic metres of timber, 6 cubic metres of foam and 12 square metres of fabric can be used. Glue, screws and other accessories will also cost GH¢80.

The Carpenters who will do the cutting, joining and finishing will use 35 hours. Since the company is fairly new, it will engage a tailor to sew the fabric to fit the sizes of the units of the chairs. For each set the tailor will charge GH¢150. Labour is paid at GH¢12 per hour plus a premium of GH¢5 per hour when the job requires more than 20 hours.

Timber is priced at GH¢25 per cubic metre, foam is GH¢20 per cubic metre while the fabric is GH¢15 per square metre. The Accountant has estimated overhead absorption rate of 20% on direct material cost.

Required:
i) Determine the prime cost of a set of living room furniture. (10 marks)
ii) Determine the full cost of a set of living room furniture. (5 marks)

b) Kempion Breweries Ltd has just commenced business in the alcoholic beverage sector of Ghana producing a local gin called Pitoo and is desirous of having a good grasp of its costs for product costing, valuation and pricing purposes.

Required:
State FOUR (4) features of a process costing system to be used by Kempion Breweries to arrive at the total cost of Pitoo. (5 marks)

Answer

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Tags: Features of Process Costing, Full Cost, Prime Cost
Level: Level 1

Topic: Cost Segregation and Estimation, Process Costing
Series: APR 2022

IMAC – APRIL 2022 – L1 – Q1 – Budgeting | Process Costing

Computation of costs and preparation of Process X account using the weighted average method, and preparation of functional budgets for a manufacturing firm.

Question

a) The following information has been extracted from the records of a company for the half-year ended 31 March 2021. A product, Capital Q, goes through two processes, X and Y:

Details relating to Process X for the period: Input units: 5,000 Finished units transferred to Process Y: 3,200 Closing WIP: 840 Normal losses: 10%

Normal losses have an estimated resale value of GH¢4 per unit.

Costs incurred during the period:

	GH¢
Direct materials	31,250
Direct labour	21,200
Overheads	17,325

Abnormal Losses and Closing WIP had the following degrees of completion at the end of the period:

	Direct materials	Direct labour	Overheads
Abnormal Losses	100%	80%	50%
Closing WIP	100%	80%	50%

Required: Using the weighted average method: i) Compute the cost per unit for each of the element of costs. (5 marks)

b) Compute the value of the complete units transferred to Process Y. (5 marks)

c) Compute the value of the closing WIP. (5 marks)

d) Prepare Process X Account for the period. (5 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Abnormal Loss, Cost per Unit, Functional Budgets, Principal Budget Factor, Process Account
Level: Level 1

Topic: Budgeting, Process Costing
Series: APR 2022

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

Find Related Questions by Tags, levels, etc.

Tags: Abnormal Gain, Manufacturing Costs, Normal Loss, Process Costing, scrap value
Level: Level 1

Topic: Process Costing
Series: MAY 2015

IMAC – July 2023 – L1 – Q1 – Cost-Volume-Profit (CVP) Analysis | Process Costing

Prepare the Process Account for Omicron vaccine production and calculate the break-even point and required units to achieve target profit before and after tax

Question

Required:
Prepare the Process Account of the Omicron vaccine for the period. (10 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: After-tax Profit, Break-even Analysis, Process Costing, Target Profit
Level: Level 1

Topic: Cost-Volume-Profit (CVP) Analysis, Process Costing
Series: JULY 2023

IMAC – April 2022 – L1 – Q3 – Cost Segregation and Estimation | Process Costing

Determination of prime and full costs of living room furniture and features of a process costing system.

Question

Required:
i) Determine the prime cost of a set of living room furniture. (10 marks)
ii) Determine the full cost of a set of living room furniture. (5 marks)

Required:
State FOUR (4) features of a process costing system to be used by Kempion Breweries to arrive at the total cost of Pitoo. (5 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Features of Process Costing, Full Cost, Prime Cost
Level: Level 1

Topic: Cost Segregation and Estimation, Process Costing
Series: APR 2022

IMAC – APRIL 2022 – L1 – Q1 – Budgeting | Process Costing

Computation of costs and preparation of Process X account using the weighted average method, and preparation of functional budgets for a manufacturing firm.

Question

a) The following information has been extracted from the records of a company for the half-year ended 31 March 2021. A product, Capital Q, goes through two processes, X and Y:

Details relating to Process X for the period: Input units: 5,000 Finished units transferred to Process Y: 3,200 Closing WIP: 840 Normal losses: 10%

Normal losses have an estimated resale value of GH¢4 per unit.

Costs incurred during the period:

	GH¢
Direct materials	31,250
Direct labour	21,200
Overheads	17,325

Abnormal Losses and Closing WIP had the following degrees of completion at the end of the period:

	Direct materials	Direct labour	Overheads
Abnormal Losses	100%	80%	50%
Closing WIP	100%	80%	50%

Required: Using the weighted average method: i) Compute the cost per unit for each of the element of costs. (5 marks)

b) Compute the value of the complete units transferred to Process Y. (5 marks)

c) Compute the value of the closing WIP. (5 marks)

d) Prepare Process X Account for the period. (5 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Abnormal Loss, Cost per Unit, Functional Budgets, Principal Budget Factor, Process Account
Level: Level 1

Topic: Budgeting, Process Costing
Series: APR 2022

Topic: Process Costing

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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.

IMAC – July 2023 – L1 – Q1 – Cost-Volume-Profit (CVP) Analysis | Process Costing

Prepare the Process Account for Omicron vaccine production and calculate the break-even point and required units to achieve target profit before and after tax

IMAC – April 2022 – L1 – Q3 – Cost Segregation and Estimation | Process Costing

Determination of prime and full costs of living room furniture and features of a process costing system.

IMAC – APRIL 2022 – L1 – Q1 – Budgeting | Process Costing

Computation of costs and preparation of Process X account using the weighted average method, and preparation of functional budgets for a manufacturing firm.

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.

IMAC – July 2023 – L1 – Q1 – Cost-Volume-Profit (CVP) Analysis | Process Costing

Prepare the Process Account for Omicron vaccine production and calculate the break-even point and required units to achieve target profit before and after tax

IMAC – April 2022 – L1 – Q3 – Cost Segregation and Estimation | Process Costing

Determination of prime and full costs of living room furniture and features of a process costing system.

IMAC – APRIL 2022 – L1 – Q1 – Budgeting | Process Costing

Computation of costs and preparation of Process X account using the weighted average method, and preparation of functional budgets for a manufacturing firm.

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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.

You're reporting an error for "MI – May 2015 – L1 – SB – Q2 – Costing Methods"

IMAC – July 2023 – L1 – Q1 – Cost-Volume-Profit (CVP) Analysis | Process Costing

Prepare the Process Account for Omicron vaccine production and calculate the break-even point and required units to achieve target profit before and after tax

You're reporting an error for "IMAC – July 2023 – L1 – Q1 – Cost-Volume-Profit (CVP) Analysis | Process Costing"

IMAC – April 2022 – L1 – Q3 – Cost Segregation and Estimation | Process Costing

Determination of prime and full costs of living room furniture and features of a process costing system.

You're reporting an error for "IMAC – April 2022 – L1 – Q3 – Cost Segregation and Estimation | Process Costing"

IMAC – APRIL 2022 – L1 – Q1 – Budgeting | Process Costing

Computation of costs and preparation of Process X account using the weighted average method, and preparation of functional budgets for a manufacturing firm.

You're reporting an error for "IMAC – APRIL 2022 – L1 – Q1 – Budgeting | Process Costing"

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.

You're reporting an error for "MI – May 2015 – L1 – SB – Q2 – Costing Methods"

IMAC – July 2023 – L1 – Q1 – Cost-Volume-Profit (CVP) Analysis | Process Costing

Prepare the Process Account for Omicron vaccine production and calculate the break-even point and required units to achieve target profit before and after tax

You're reporting an error for "IMAC – July 2023 – L1 – Q1 – Cost-Volume-Profit (CVP) Analysis | Process Costing"

IMAC – April 2022 – L1 – Q3 – Cost Segregation and Estimation | Process Costing

Determination of prime and full costs of living room furniture and features of a process costing system.

You're reporting an error for "IMAC – April 2022 – L1 – Q3 – Cost Segregation and Estimation | Process Costing"

IMAC – APRIL 2022 – L1 – Q1 – Budgeting | Process Costing

Computation of costs and preparation of Process X account using the weighted average method, and preparation of functional budgets for a manufacturing firm.

You're reporting an error for "IMAC – APRIL 2022 – L1 – Q1 – Budgeting | Process Costing"

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