Preparation of process accounts with output fully completed and a discussion of FIFO and average methods of
Question:
Preparation of process accounts with output fully completed and a discussion of FIFO and average methods of WIP valuation
(a) Z Ltd manufactures metal cans for use in the food processing industry. The metal is introduced in sheet form at the start of the process.
Normal wastage in the form of offcuts is 2%
of input. The offcuts can be sold for £0.26 per kilo. Each metal sheet weighs 2 kilos and is expected to yield 80 cans. In addition to wastage through offcuts, 1% of cans manufactured are expected to be rejected. These rejects can also be sold at £0.26 per kilo.
Production, and costs incurred, in the month just completed, were as follows:
There was no opening or closing work in process.
Required:
Prepare the process accounts for the can manufacturing operation for the month just completed.
(b) Another of the manufacturing operations of Z Ltd involves the continuous processing of raw materials with the result that, at the end of any period, there are partly completed units of product remaining.
Step by Step Answer:
