Question $2$

Phantom Chemicals produces industrial solvents through a continuous process. For

June $2024,$ the following information is provided:

Work in progress $($WIP$)$ at the beginning of the month: $2,000$ liters, $40\%$

complete.

Solvent produced during June $2024$: $15,000$ liters.

WIP at the end of the month: $1,500$ liters, $30\%$ complete.

Costs incurred during June $2024$:

Direct materials: $R50,000$

Conversion costs: R$35,000$

a$)$ Calculate the equivalent production units for direct materials and conversion costs.

$(10)$

b$)$ Determine the cost per equivalent unit for direct materials and conversion costs.

$(10)$

c$)$ Compute the total cost of units completed and transferred out during June $2024.$

$(15)$

d$)$ Explain how the process costing method helps in managing costs in continuous

production processes. $(5)$