Intermediate: Losses in proce.ss (weighted average)

XY Copiers Ltd produces the Kwikflip Copier in batches ollOOO.

Each copier contains a special chemical unit plus various other chemicals and activating components. The assembly operations include the merging of the special unit with some of the other chemicals under prescribed humidity conditions, an operation which is not always successful. Experience indicates a success rate of 95% which the company has accepted as standard performance.

On 1 May, production of batch 47 was commenced and the necessary chemical units and other materials lor the batch were issued from stores, the cost price thereof being £6175 .

During May, wages amounting to £1778 were booked to batch 47 and overhead at the rate of 75% of labour cost was apportioned thereto .

At the end of May, 840 copiers of batch 47 had been completed of which 60 had proved unsuccessful and, having no value, were scrapped. Production of the remainder of the batch had passed the critical chemical merging stage; half of these were estimated to be 80% complete so far as labour and overhead costs were concerned , and the remainder, 50% complete. The average cost method is used . Losses are detected at the 50% stage of completion .

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