Losses in process (Weighted average)
A company operates expensive process plant to produce a single product from one process. At the beginning of October, 3400 completed units were still in the processing plant, awaiting transfer to finished stock. They were valued as follows:
|
£ |
|
|
Direct material |
25500 |
|
Direct wages |
10 200 |
|
Production overhead |
20 400 (200% of direct wages) |
During October, 37 000 further units were put into process and the following costs charged to the process:
|
£ |
|
|
Direct material |
276 340 |
|
Direct wages |
112 000 |
|
Production overhead |
224 000 |
36 000 units were transferred to finished stock and 3200 units remained in work-in-progress at the end of October which were complete as to material and half-complete as to labour and production overhead. A loss of 1200 units, being normal, occurred during the process. The average method of pricing is used.
You are required to
(a) Prepare for the month of October, a statement (or statements) showing
(i) Production cost per unit in total and by element of cost;
(ii) The total of production transferred to finished stock;
(iii) The valuation of closing work-in-progress in total and by element of cost;
(b) Describe five of the characteristics which distinguish process costing from job costing.
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