Question

The following information of process costing control account is related to sharjah industrial company ( producing computers) for the year 2014. Materials used for manufacturing 2500 kilogram ( at cost of AED 2500) to produce computers, expected units completed are 2200 computers, and actual completed units are 2300. The scrap value losses during the process is AED 0.60 per kilo.

Required:

1. Calculate the cost per unit for each computer.

2. Calculate the cost and value of normal losses using the scrap value.

3. Calculate the abnormal gain using the scrap value.

4. Calculate the value of units transferring to the next process.

Show your operating work in this section.

Answer 1

1)Calculate the cost per unit for each computer.

And. Cost for per kg material = 2500kg ÷ AED2500

=AED 1

Cost for per unit computer = 2500kg ÷ 2200units

= AED 1.13

2)Calculate the cost and value of normal losses using the scrap value.

And. Normal loss per unit = Input cost (-) scrap value of normal loss ÷ Expected output

= 2500 (-) (0.60×2500) ÷ 2200

= 2500 (-) 1500 ÷ 2200

= 1000÷2200

Normal loss per unit  = AED 0.45

3) Calculate the abnormal gain = Expected units - Actual units

= 2200 (-) 2300

= 100 units

Remaining extra units are produced by company is a abnormal gain for company. Eg. 100 units

= 100units × 0.68

= AED 68

4) Calculate the value of units transferring to the next process

= 2300 units × 1.58

= AED 3634