Intermediate: Equivalent production with no losses (FIFO Method)

A company operates a manufacturing process where six people work as a team and are paid a weekly group bonus based upon the actual output of the team compared with output expected.

A basic 37 hour week is worked during which the expected output from the process is 4000 equivalent units of product. Basic pay is £5.00 per hour and the bonus for the group, shared equally, is £0.80 per unit in excess of expected output.

In the week just ended, basic hours were worked on the process. The following additional informa¬ tion is provided for the week:

Required:

(a) Prepare the process account for the week just ended. (10 marks)

(b) Explain the purpose of the following docu- ments which are used in the control of, and accounting for, the materials used in the process described in part (a)
(i) purchase requisition (ii) materials (stores) requisition.

Transcribed Image Text:

Opening work in process (1000 units): Materials 540 (100% complete) Labour and overheads 355 (50% complete). During the week: Materials used 2255 Overheads incurred 1748