QUESTION $2$

Syarikat Jenin using process costing to gather information on production costs. All direct materials are

added at the beginning of the process and conversion costs are evenly incurred throughout the

production process. A review of Work in Process Account for August shows the following

information:

Debit Section

Beginning balance: $600$ units, $40\%$ completed, costs RM$44,{600}^{**}$

Production start units: $1,800$ units

Direct materials involved in August: RM$90,000$

Conversion costs incurred in August: RM$51,400$

Credit Section:

Units completed and transferred out: $1,400$ units

Supporting documents show direct material costs RM$30,000$ and conversion costs

RM$14,600.$

Interview with production personnel found that the Work in Process balance is $80\%$ completed.

Required:

a$)$ Explain the main differences between the average method and first in first out $($FIFO$)$ method in

the process costing system.

b$)$ Calculate the physical unit flow.

c$)$ For each method in a$),$ calculate:

i$)$ Unit equivalents for direct material and conversion costs

ii$)$ Cost per unit equivalent for direct material and conversion costs.

iii$)$ Total costs for unit transferred to finished goods inventory.