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Intermediate: Losses in process (FIFO and weighted average methods). A company produces a single product from one of its manufacturing processes. The following information of

Intermediate: Losses in process (FIFO and weighted average methods). A company produces a single product from one of its manufacturing processes. The following information of process inputs, outputs and work in progress relates to the most recently completed period:

kg

Opening work in progress 21 700

Materials input 105 600

Output completed 92 400

Closing work in progress 28 200

The opening and closing work in progress are respectively

60 per cent and 50 per cent complete as to conversion costs. Losses occur at the beginning of the process and have a scrap value of 0.45 per kg.

The opening work in progress included raw material costs of

56 420 and conversion costs of 30 597. Costs incurred during the period were:

Materials input 276 672

Conversion costs 226 195 Required:

(a) Calculate the unit costs of production ( per kg to four

decimal places) using:

(i) the weighted average method of valuation and assuming that all losses are treated as normal;

(ii) the FIFO method of valuation and assuming that normal losses are 5 per cent of materials input.

(13 marks)

(b) Prepare the process account for situation (a) (ii) above.

(6 marks)

(c) Distinguish between:

(i) joint products, and

(ii) by-products and contrast their treatment in process accounts. (6 marks)

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