THE PRACTICE EXERCISES
Exercise 1.
\( \mathrm{JJ} \) has a factory which operates two production processes, cutting and pasting. Normal loss in each process is \( 10 \% \). Scrapped units out of the cutting process sell for \( \$ 3 \) per unit whereas scrapped units out of the pasting process sell for \( \$ 5 \). Output from the cutting process is transferred to the pasting process: output from the pasting process is finished output ready for sale.
Relevant information about costs for control period 7 are as follows.
\begin{tabular}{|l|r|r|r|r|}
\hline & \multicolumn{3}{|c|}{ Cutting process } & \multicolumn{2}{|c|}{ Pasting process } \\
\hline Input materials & 18,000 Units & \( \$ 54,000 \) & & \\
\hline Transferred to pasting process & 16,000 Unit & & & \\
\hline Materials from cutting process & & & 16,000 units & \\
\hline Added materials & & & 14,000 units & \( \$ 70,000 \) \\
\hline Labour and overheads & & \( \$ 32,400 \) & & \( \$ 135,000 \) \\
\hline Output to finished goods & & & 28,000 units & \\
\hline
\end{tabular}
Task 1: Using the information above, prepare accounts for the cutting process Determine output and losses
\begin{tabular}{|l|l|}
\hline Actual output (units) & \\
\hline Abnormal loss (units) & \\
\hline Expected output (units) & \\
\hline
\end{tabular}
Calculate cost per unit of output and losses
\begin{tabular}{|l|l|}
\hline Normal loss (\$) & \\
\hline Abnormal loss (\$) & \\
\hline Total scrap (\$) & \\
\hline
\end{tabular}
\begin{tabular}{|l|l|l|l|}
\hline & Total cost & Number of units & \begin{tabular}{l}
Cost per expected \\
unit of output (\$)
\end{tabular} \\
\hline Materials & & & \\
\hline \begin{tabular}{l}
Less normal loss \\
scrap value
\end{tabular} & & & \\
\hline and & & & \\
\hline \begin{tabular}{l}
Labour \\
overhead
\end{tabular} & & & \\
\hline Total & & \\
\hline
\end{tabular}
Calculate total cost of output and losses
\begin{tabular}{|l|l|}
\hline Output & \\
\hline Normal loss & \\
\hline Abnormal loss & \\
\hline
\end{tabular}
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