- Question One Kass Manufacturing Ltd Kml Is A Textile Company It Produces Different Fabrics For Both Individuals And 1 (77.21 KiB) Viewed 7 times
- Question One Kass Manufacturing Ltd Kml Is A Textile Company It Produces Different Fabrics For Both Individuals And 2 (62.99 KiB) Viewed 7 times
Question One Kass Manufacturing Ltd (KML) is a textile company. It produces different fabrics for both individuals and institutions. KML's products pass through a series of processes. It uses the First in First out (FIFO) valuation method. In Process 2, two materials (X and Z) are added to the output from Process 1 to form the final fabric MK. It is expected that 10% of any new input to Process 2 (that is, transfers from Process 1 plus Process 2 materials added) will be immediately lost and that this loss will have no resale value. It is also expected that in addition to the loss, 4% of any new input will form a by-product, KM2, which can be sold without additional processing for K10.00 per metre. Data from Process 2 for April 2022 was as follows: Opening work in process Process 2 had 1,200 metres of opening work in process. The value and of this was as follows: Process 1 X Z Conversion costs Input During April, the inputs to Process 2 were: Process I X Z Conversion costs % degree of completion Metres KM2 MK 25,000 6,000 15,000 Output The output from Process 2 during April was: 2032 Closing work in process At the end of April, the work in process was 7,250 litres. This was fully complete in respect of all materials, but only 30% complete for conversion costs. 2,300 metres 39,250 metres K 78,395 30,000 22,500 114,000 Required: (i) Prepare the Process 2 account for April 2022 (ii) Differentiate between a joint product and a by-product (20 marks) (6 marks)