Equivalent production with losses (FIFO method)

Partlet Ltd makes a product that passes through two manufacturing processes.

A normal loss equal to 8 per cent of the raw material input occurs in Process

| but no loss occurs in Process II. Losses have no realizable value. All the raw material required to make the product is input at the start of Process |. The output from Process | each month is input into Process II in the same month. Work in progress occurs in Process II only. Information for last month for each process is as follows:
Process |
Raw material input 50000 litres at a cost of £365000 Conversion costs £256 000 Output to Process II 47 000 litres Process II Opening work in progress 5000 litres (40 per cent complete for conversion costs)
valued at £80000 Conversion costs £392 000 Closing work in progress 2000 litres (50 per cent complete for conversion costs)
Required:

(a) Prepare the Process | account for last month.
(5 marks)

(b) Calculate in respect of Process |I for last month:
(i) The value of the completed output; and (ii) The value of closing work in progress.
(5 marks)

(c) If the losses in Process | were toxic and the company incurred costs in safely disposing of them, state how the disposal costs associated with the normal loss would have been recorded in the Process | account. No calculations are required.
(2 marks)
ACCA Financial Information for Management