Intermediate: Equivalent production with no losses A cleansing agent is manufactured from the input of three ingredients. At 1 December there was no work in progress. During December the ingredients were put into the process in the following quantities:

A 2000 kg at 80 p/kg B 3000 kg at 50 plkg C 6000 kg at 40 p/kg Additionally, labour working 941 hours and being paid £4 per hour was incurred, and overheads recovered on the basis of 50% of labour cost. There was no loss in the process. Output was 8600 kg.

The remaining items in work in progress were assessed by the company's works manager as follows:

Complete so far as materials were concerned;

One quarter of the items were 60% complete for labour and overheads;

Three-quarters were 25% complete for labour and overheads.

Required:

(a) A cleansing agent process account, showing clearly the cost of the output and work in progress carried forward.

(b) Define the following terms, give examples and explain how they would be accounted for in process costing:
(i) By-products (ii) Abnormal gain (iii) Equivalent units