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Question 1. Thirsty Ltd who manufacture orange juice use a process costing system. All direct materials are added at the beginning of the process and

Question 1.

Thirsty Ltd who manufacture orange juice use a process costing system. All direct materials are added at the beginning of the process and conversion costs are incurred evenly throughout production. The information for April's activities is given below:

Work in process 1 April - 10,000 units

Direct material (100% complete)

$22,000

Conversion cost (20% complete)

$8,000

Balance of work in process, 1 April

$26,500

Units started during April

100,000 units

Units completed during April and transferred out to finished goods inventory

80,000 units

Work in process , 30 April:

Direct materials (100% complete)

Conversion (30 % complete)

Costs incurred during April:

Direct material

$198,000

Conversion costs:

$158,400

Direct labour $52,800

Manufacturing overhead $105,600

Total production costs incurred during April

$356,400

Required:(where necessary round off all figures to two decimal places)

Answer the following question using the weighted average method. Show all workings.

a)Show a summary of the total physical flow of units.

b)Calculate the equivalent units for the company.

c) Calculate the equivalent unit cost for the product.

d) Explain why under process costing, direct labour cost and conversion cost are added together?

(2+2+4+3=11marks)

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