Question

Sagousted e r deler amounts Costing Revision: Process Costing Outpu 167,87 I WIP 5,892 Question 14 Abrormal gain Norwallow 1960 ZTE Ltd manufactures a product which passes through 2 processes before completion. Details for Process 1 during the month ended 31 March 2006 were as follows: Work in progress as at 1 March 550 units Direct materials Conversion costs Cost(s) 25,300 16,950 During the period under review, a further 9,800 units were introduced The following costs were incurred Direct materials Conversion costs 75,600 54,500 Work in progress as at 31 March: 40D units Degree of Completion% 100 - Direct materials . Conversion costs 70 At the end of the period, 9.954 units were transferred to Process 2. Materials were added at the beginning of the period. Normal loss in Process 1 was set 2% of input) All units lost were discovered halfway through the process. Spoilage was scrapped at $10 per unit. Setep Valve offset opahet water cost seta2% of ich the procese offset of A Required: Prepare for the month of March - A cost of production report for Process 1 showing • Quantity schedule and Statement of Equivalent Units . Statement of Cost • Statement of Valuation B Process 1 Account Note well: • Show average cost per equivalent unit at 4 decimal places Valuation figures rounded off to whole numbers

Answer 1

A)

i)	Statement of equivalent production
						Material			Conversion cost
	Particulars	Units	Particulars	Units		%	Units		%	Units
	Beginning WIP	550	Completed	9954		100%	9954		100%	9954
	Introduction	9800	Normal Loss	196		0%	0		0%	0
			Abnormal Gain	-200		100%	-200		100%	-200
			Ending WIP	400		100%	400		70%	280
		10350		10350			10154			10034

ii)	Statement of cost per equivalent unit
	Element of cost		Units	Cost	Cost/eq. unit
	Material		10154	$ 98,940.00*	$             9.74
	Conversion cost		10034	$ 71,450.00	$             7.12
					$           16.86

Material Cost = $ 25300 + $ 75600 - (196 x $ 10)

= $ 98640

iii)	Statement of Valuation
	Cost of goods completed and transferred =				(9954 units x $ 16.86)
				=	$       167,872
	Cost of Closing WIP
		Unit	Cost/eq. unit	Cost
	Material	400	$                   9.74	$         3,898
	Conversion	280	$                   7.12	$         1,994
				$         5,891
	Normal Loss	196	$                10.00	1960
	Cost of Abnormal Gain
		Unit	Cost/eq. unit	Cost
	Material	200	$                   9.74	$         1,949
	Conversion	200	$                   7.12	$         1,424
				$         3,373

B)

Process 1 Account
Particulars		Unit	Rate	Amount	Particulars		Unit	Rate	Amount
To Opening WIP		550		$         42,250	By Normal Loss		196	$   10.00	$           1,960
To Introduction		9800		$       130,100	By Units Completed		9954		$       167,872
To Abnormal Gain		200		$           3,373	By Ending WIP		400		$           5,891
		10550		$       175,723			10550		$       175,723