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QUESTION TWO [25 Marks) Forbes Manufacturing CC uses a FIFO costing system to value its production. At the beginning of the month of September 2020,

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QUESTION TWO [25 Marks) Forbes Manufacturing CC uses a FIFO costing system to value its production. At the beginning of the month of September 2020, the work-in-progress account in the moulding department consists of 2000 units, which are 25% complete. The units are valued as follows: R15 000 Materials Direct Labour and overheads R 5000 During the current period, 10 000 new units were started in the department, and at month- end the work in progress account consists of 4 000 units, which are 70% complete Current period costs are as follows: R22 000 Materials Direct Labour R13 000 Overheads are recovered at a rate of R2 for every R1 of direct labour. Materials are added at the beginning of the process, while conversion costs are incurred evenly throughout the process Inspection of the units take place at the end of the process when it can be determined whether or not there has been any spoilage. By the end of the month, 2000 units have been spoiled. Spoilage of up to 10% of good output is acceptable. REQUIRED: 1. Calculate the equivalent units of production (11) 2. Prepare a schedule showing the allocation of costs to closing work-in- progress, output transferred to the next department, and abnormal spoilage if any. (14)

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