A process for making lead shot involves melting ingots of lead, then pouring the melt from a height, into a cooling bath. There is a loss of material due to spillage of the melt and splatter by the bath. This material is sold for scrap. In a normal production run 1kg of lead costing K40 would produce 0.95kg of shot with the scrap being sold for K20 per kg.
In a week 100kg of lead was processed and 92kg of lead shot produced. Labour costs of K550 were incurred and overhead costs are normally allocated at a rate of 4 times labour costs.
A.Calculate the cost per unit for lead shot (7 Marks)
B.Write up the process account (10 Marks)
Write up the loss account