Direction Ltd. manufactures a clothing product using a sequence of two processes. A following are details of the two processes for the month of August 2018: Process A: There was no work-in-progress in Process A at 1st August 2018, but during August production began on 56,000 units. Raw materials are added at the start of Process A and conversion costs are incurred evenly during the process. During August the costs incurred were 224,000 for raw materials and C199,164 for conversion cost. A quality control inspection is carried out when Process A is 50% complete; any items identified as 2.50 each. Normally 4% of items inspected are found to be defective, but the actual number of defective items in August was 2,760 units. Work-in-progress in Process A at 31st August amounted to 12,000 units, these units were 40% complete as regards conversion cost. All units which completed Process A during August were transferred to Process B Process B: Additional raw materials are added when Process B is 40% complete as regards conversion cost. Conversion costs are incurred evenly during Process B. There were 8,000 units of work-in-progress in Process B at 1st August 2018 which were 60% complete as regards conversion cost and had a book value of 90,230 (consisting of previous process cost 64,338; raw materials 8,252; and conversion cost 17,640). During August, production began in Process B on all of the units which were transferred from Process A. Costs added to Process B during August were 37,150 in respect of raw materials and 140,000 in respect of conversion cost. The rate of normal loss in Process B is 10%. Losses are identified at the end of Process B and any lost units are immediately sold for a scrap value of 4 each. There were no abnormal losses or gains in Process B in August. Work-in-progress at 31st August 2018 was 6,000 units which were 30% complete as regards conversion cost