Problem:
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.