Intermediate: Losses part way through process

(weighted average)

The Lewis Company manufactures a product on a continuous process basis which passes through one department. The product uses three different items of materials. Materials A and B are introduced at the start or the process and material Cis introduced when the process is 60% complete. Labour and overhead costs are added continuously throughout the process and overhead is charged at 100% of the direct labour cost The work in progress at the start of the accounting period consisted of 3000 units 20% complete valued at £17 880 consisting of £12 600 for material A, £2400 material 8 and conversion costs of

£2880.

During the period 20 000 units were started and the following costs were Incurred:

The completed production for the month was 15 000 units and the closing work in progress consisted of 4000 units which were 50%
complete. Because of an error an unexpected loss occurred and all the opening work in progress was spoilt. This loss was discovered when the opening waft In progress was 40% complete. Normal loss is as expected and this Is detected at the 90% stage .
You are required to produce the process account for the period and show your calculations of the cost per unit, closing work in progress and cost of completed production. Use the weighted average method .

Transcribed Image Text:

Material A 84000 Material B 16000 Material C 19200 Direct labour 44 400