Integrated accounts and stores pricing On 30 October 2002 the following were among the balances in the
Question:
Integrated accounts and stores pricing On 30 October 2002 the following were among the balances in the cost ledger of a company manufacturing a single product (Product X) in a single process operation:
12160kg of Product X were in finished goods stock on 30 October 2002.
During November 1999 the following occurred:
absorbed at a predetermined rate of £8-00 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) 45937kg of Product X were manufactured.
There was no work-in-progress at the beginning or end of the period. A normal loss of 5%
of input is expected.
(vi) 43 210kg 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 2002:
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. (16 marks)
(b) Explain the concept of equivalent units and its relevance in a process costing system.
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