On 30 October the following were among the balances in the cost ledger of a company manufacturing a single product (Product X) in a single process operation:

The raw material ledger comprised the following balances at 30 October:

12 160 kg of Product X were in finished goods stock on 30 October. During November the following occurred:
(i) Raw materials purchased on credit:

(ii) Raw materials issued from stock:

Direct materials are issued at weighted average prices (calculated at the end of each month to
three decimal places of £).
(iii) Wages incurred:

(iv) Other manufacturing overhead costs totalled £112 194. Manufacturing overheads are absorbed at a predetermined rate of £16.00 per direct labour hour. Any over/under absorbed overhead at the end of November should be left as a balance on the manufacturing overhead control account.
(v) 45 937 kg of Product X were manufactured. There was no work in progress at the beginning or end of the period. A normal loss of 5 per cent of input is expected.
(vi) 43 210 kg of Product X were sold. A monthly weighted average cost per kg (to three decimal places of £) is used to determine the production cost of sales.
Required:
(a) Prepare the following cost accounts for the month of November.
Raw Material Control Account
Manufacturing Overhead Control Account
Work-in-Progress Account
Finished Goods Account
All entries to the accounts should be rounded to the nearest whole £. Clearly show any workings supporting your answer.
(b) Explain the concept of equivalent units and its relevance in a process costing system.

Transcribed Image Text:

Dr £87 460 £148 352 Cr Raw Material Control Account Manufacturing Overhead Control Account Finished Goods Account £5 123 Direct materials: Material A Material B: 18 760 kg £52 715 £29 994 £4 751 Indirept materials2kg E29 994 Material Ac Material B: Indirect: 34220 kg at E2.85/kg 34520 kg at £7.10/kg £7221 Material A: Material B: Indirect: 35 176 kg 13364 kg £6917 Direct: Indirect £186743 (23 900 hours) £74 887