management accounting 458833

(a) Process costing (7 marks)

The following information has been gathered from the production department of the XYZ Company for April. The XYZ production department uses a process costing system and manufactures a pasta sauce which uses two raw material components (RM1 and RM2).

Work in Process at 1 April (85% completed) 6,000

Units started during April 72,000

Completed and transferred to finished goods during April 75,000

Cost In WIP “1 April Current Month

Material – RM1 $14,460 $121,920

Material – RM2 6,510 75,800

Direct Labour 6,000 61,866

Factory overhead 7,500 77,334

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Raw material RM1 is introduced at the beginning of the process while RM2 is added at the stage when the product is 60% complete. Conversion costs are incurred at a uniform rate throughout the process. On April 30, Work-in-Process is 35% complete. There were no losses or spoilage during processing.

Using the weighted average cost method, calculate the:

(i) cost per equivalent unit of production

(ii) cost of completed units for the month of April

(iii) closing value of WIP at the end of April.

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