Quiz 3 Normal and Abnormal Loss FIFO and Weighted Average Quiz 3 Normal and Abnormal Loss FIFO

mal and Abnormal Loss FIFO and Weighted Average

Jammy Ltd is a manufacturing organization produces its product using three Jammy Ltd is a manufacturing organization produces its product using three
processes, Process 1 and Process 2 which uses weighted average process processes, Process 1 and Process 2 which uses weighted average process
costing and Process 3 that applies FIFO. Information for the period ended 31 July costing and Process 3 that applies FIFO. Information for the period ended 31 July
2016 related to processing departments Process 1 and Process 2 were as 2016 related to processing departments Process 1 and Process 2 were as
follows: follows:
Process 2 Process 3 Process 2 Process 3
Production Data: Qty WD Qty WD Production Data: Qty WD Qty WD
In Process 7/1 10,000 50% 5,000 30% In Process 7/1 10,000 50% 5,000 30%
Placed in process 40,000 Placed in process 40,000
In Process 7/31 4,500 80% 4,000 75% In Process 7/31 4,500 80% 4,000 75%
Transferred out ? 43,000 Transferred out ? 43,000
Loss Units ? 3,000 Loss Units ? 3,000
Cost Data Cost Data
In Process 7/1 In Process 7/1
Cost from Preceding Process 21,550 27,000 Cost from Preceding Process 21,550 27,000
Materials 5,505 --- Materials 5,505 ---
Labor 5,510 1,218 Labor 5,510 1,218
Overhead 4,750 3,225 Overhead 4,750 3,225
Cost added this month Cost added this month
Cost from Preceding Process 95,550 ? Cost from Preceding Process 95,550 ?
Materials 44,155 215,033 Materials 44,155 215,033
Labor 47,302 38,665 Labor 47,302 38,665
Overhead 42,194 102,030 Overhead 42,194 102,030
Normal losses are expected to be 1% of transferred-in and 5% of transferred-out Normal losses are expected to be 1% of transferred-in and 5% of transferred-out
for Process 2 and Process 3 respectively and these losses are deemed to arise at for Process 2 and Process 3 respectively and these losses are deemed to arise at
60% for Process 2 and at the end for Process 3. The loss units in Process 3 are 60% for Process 2 and at the end for Process 3. The loss units in Process 3 are
transferred to spoiled goods inventory at a salvage value of P5/unit. transferred to spoiled goods inventory at a salvage value of P5/unit.

Materials in Process 2 are added 50% at the start and another 50% when the
product reach the inspection point, while for Process 3, the addition of materials
starts only when the stage of completion reached 50%, from this point 50% of the
materials will be added evenly until completion and the other 50% will only be
added when the goods are free of any defects.
Materials in Process 2 are added 50% at the start and another 50% when the
product reach the inspection point, while for Process 3, the addition of materials
starts only when the stage of completion reached 50%, from this point 50% of the
materials will be added evenly until completion and the other 50% will only be
added when the goods are free of any defects.

Prepare the cost of production report for the month of July 2016. Prepare the cost of production report for the month of July 2016.