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The University of Lahore School of Accountancy & Finance
Cost and management accountant 2nd Semester (Evening) Class Test Date: 26/12/2011 Time Allowed: 1 hour and 15 minutes Marks: 20

Attempt all question, Carrying equal marks
Question #1
The Sterling Company uses process costing. In department B, conversion costs are incurred uniformly throughout the process. Materials are added at the end of the process, following inspection. Normal spoilage is expected to be 5% of good output. The following information related to department B for January:

Received from department A Transferred to finished goods Ending inventory (70% complete) Cost incurred: Materials Labor and factory overhead

Units 12,000 9,000 2,000

Dollars $84,000

18,000 45,600

Required: process account Question # 2 During February, the Assembly department received 60,000 units from Cutting department at a unit cost of $3.54. Costs added in the Assembly department were: materials, $41,650; labor, $101,700; and factory overhead. $56,500. There was no beginning inventory. Of the 60,000 units received, 50,000 were transferred out; 9,000 units were in process at the end of the month (all materials, 2/3 converted); 1,000 lost units were 1/2 complete as to materials and conversion costs. The entire loss is considered abnormal and is to be charged to factory overhead. Required: process account and abnormal loss account. Question # 3

A product passes through three processes A, B and C. The normal wastage of each process is as follows: Process A-3%, Process B-5% and Process C-8%. Wastage of Process A was sold at 25 P. per unit that of process B at 50 P per unit and that of Process C at Rs. 1 per unit. 10000 units were introduced to process A in the beginning of October 1997 at a cost of Rs. 1 per unit. The other expenses were as follows:
Sundry Materials Labor Process A Rs. 1,000 5,000 Process B Rs. 1,500 8,000 Process C Rs. 500 6,500

Direct expenses Actual Output units

1,050 9,500

1,188 9,100 units

2,009 8,100 units

Prepare the Process accounts, assuming that there was no opening or closing stock. Also give the abnormal wastage and abnormal Gain Account.
Question # 4

Syed Ltd manufactures and sells three chemicals Produced by consecutive processes known as A.,B and C. In each process 2% of the total weight put in is lost and 10% is scrap, which from Processes A and B realized Rs. 100 a tonne and from C Rs 200 a tonne. The product of the three process are dealt with as follows. A B C Sent to Ware house for Sale Passed on to the Next process Following particulars relate to the month of May: Materials used (tonnes) Cost per tonne of materials (Rs.) Mfg Expenses(Rs.) 20 308 00 25% 75% 50% 50% 100 % __ 10 00 1 0 2576 0 80 18,1 00 14 0 20 1,34 8

Prepare an Account for each process, showing the cost per tonne of each product.

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