Everyman’s Foods Pic has recently acquired a factory which processes soya beans. The soya beans pass through a series of processes, including cleaning, roasting and grinding to a soya powder. In the final process of the series, other ingredients are added to the powder and four distinct products emerge. These are:
(i) Soya flour, which is bagged and sold to health food shops.
(ii) Soya broth soup, which is canned and sold to supermarkets.
(iii) Soya steak powder, which is passed through further operations to produce soya steak. The steak is then packed and sold to restaurants.
(iv) A small quantity of liquid which is sold to amateur gardeners as a fertiliser. The management of Everymans Foods Pic require a process costing system to be installed, using monthly actual costs, and have requested your advice.
(a) Briefly explain the type of information which would be required in order to operate a process costing system in the above factory.
(b) Outline the type of information which would be produced by the above system and carefully explain
the users and the limitat'ons of that data.