Produce the packaging process account

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Question - Yousef Ltd manufactures 'white gold' milk through two basic processes, sterilization and packaging. The practical details of the three-month packaging process are as follows: NO opening work in progress (WIP) was provided. Input from sterilization process 15,000 litres £180,000 Labour for three months £90,000 Overheads for three months £60,000 At the end of three months, the closing WIP reached 6,500 litres, which were 100% complete for materials, 70% for labour and 40% for overheads. Yousef Ltd normally has a 12% operating loss in the packaging process, while actual losses in this period amounted to 800 litres, which were fully completed and disposed of.

Required:

a) Calculate whether there was a: Abnormal loss or Abnormal gain for that period.

b) Produce the packaging process account, showing the equivalent cost per unit, the completed output value and the WIP for that period.

c) 'There is a distinct accounting treatment for both normal losses and abnormal losses'. Briefly identify the distinction between the two.

Reference no: EM132499149

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