Question

The following information relates to process 3 of a three-stage production process for the month of

January 2019.

Opening inventory 300 units complete as follows:

Materials from process 2 100% costing OMR 4,400

Further materials 90% costing OMR 1,150

Labour 80% costing OMR 540

Production overhead 80% costing OMR 810

Total OMR 6,900

During January 2019, a further 1,800 units were transferred from process 2 at a valuation of OMR 27,000. Added materials amounted to OMR 6,600 and direct labour to OMR 3,270. Production overhead is absorbed at the rate of 150% of direct labour cost.

Closing inventory at 31 January 2019 amounted to 450 units, complete as follows:

Process 2 materials 100%

Added materials 60%

Labour and overhead 50%

Required

Prepare the process 3 accounts for January 2020 using FIFO Method (Hint: Step 1 Statement of Equivalent Units, Step 2 Statement of Cost per Equivalent Units, Step 3 Statement of Evaluation and Step 4 Process 3 Account)