Process Costing in a Public Accounting Firm
Scrooge and Zilch, a public accounting firm in London, is engaged in the preparation of income tax returns for individuals. The firm uses the weighted-average method of process costing for internal reporting. The following information pertains to February. (£ denotes the British monetary unit, pounds sterling.)*
Returns in process, February 1: |
|
(25% complete) | 200 |
Returns started in February | 825 |
Returns in process. February 28: |
|
(80%complete) | 125 |
Returns in process, February 1: |
|
Labor | £ 6,000 |
Overhead | 2,500 |
Labor. February (4,000hours) | 89,000 |
Overhead, February | 45,000 |
*Although the euro is used in most European markets, day-to-day business in the United Kingdom continues to be conducted in pounds sterling
Required:
1. Compute the following amounts for labor and for overhead:
a. Equivalent units of activity.
b. Cost per equivalent unit. (Remember to express your answer in terms of the British pound sterling, denoted by £.)
2. Compute the cost of returns in process as of February 28.
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