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Question 2 (40 marks) Namibia Cleaning Agents (NCA) is a company based in Okahandja that produces and sells a cleaning agent. Due to the
Question 2 (40 marks) Namibia Cleaning Agents ("NCA") is a company based in Okahandja that produces and sells a cleaning agent. Due to the sophistication of the production process, NCA uses a process costing system to value its inventory. The production requires that inspection is done at the end of the process and a normal loss of 5% is anticipated at inspection. The following information relates to the production process for July 2022: Opening inventory of work in progress (25% completed) Units introduced Units transferred to assembly department Closing inventory of work in progress (85% completed) Opening Material Conversion Cost incurred in current period: Material Conversion Units 105 000 225 000 270 000 30 000 Cost (N$) 487 500 192 000 840 000 2 700 000 Page 10 of 16 FACULTY OF COMMERCE, MANAGEMENT AND LAW REQUIRED 2.1. 2.2. Prepare the process cost report for the cutting department using the First In, First Out (FIFO) method. (Show all your workings, and where possible, round off your final answers to two decimal places). Prepare the process cost report for the cutting department using the Weighted Average Cost (WACO) method. (Show all your workings, and where possible, round off your final answers to two decimal places). Marks Sub- total Total 17 17 17 34 2.3. 2.4 Which of the two methods would you recommend to NCA and why? Explain why the two methods gives different unit costs of finished goods and work in process. 3 37 3 40 40 TOTAL MARKS
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