Question
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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