The following data apply to Zabra Ltd in its mixing department for the month of September. All raw materials are fully added at the beginning of the production process and conversion occurs uniformly throughout the production process.

On 1 September 2019, Zabra had work in process comprised of 10,000 units. These units were 20 percent complete in terms of conversion. The table below presents the cost data for work in process inventory (WIP) and costs incurred for the production during September 2019.

WIP inventory 1 September 2019 Costs during September

Direct Materials $40,000 $140,000

Direct Labour $10,000 $80,000

Manufacturing Overhead $6,000 $60,000

During September 2019, Zabra completed and transferred out 65,000 units. At the end of the month, 25,000 units remain in work in process and these units were 40 percent complete with respect to conversion. The company uses a weighted average cost method to value production flows and inventories.

Required: (a) Calculate the following, showing all workings clearly and logically (round all calculations to two decimal places):

(i) Equivalent units of production for direct materials and conversion costs.

(ii) The cost per equivalent units for September 2019. (iii) The costs of goods completed and transferred out in September 2019.

(iv) The costs of work in process inventory as at 30 September 2019.

(b) Explain what is meant by spoilage and how normal and abnormal spoilage are treated under process costing.

(c) Discuss five differences between process costing and job costing.

(d) Process costing is not suited to service firms, as services cant be replicated in the same way that manufacturing processes can be. Do you agree? Explain.

a)	Physical Units		Equivalent Units
	# units	% complete (conversion)	DM	Conversion
WIP 1st September
Units started in September
Total units to account for
Units completed & transferred out during September
WIP 30 September
Total units to account for
Total equivalent units (EQU)
Costs to Account for & Unit Costs
WIP 1st September
Costs incurred during September
Total costs to account for:
Cost / EQU for September
Calculation of Inventory values
Cost of goods completed & transferred out during September
Cost of WIP 30 September