Losses in process (Weighted average)

A company operates expensive process plant to produce a single product from one process. At the beginning of October, 3400 completed units were still in the processing plant, awaiting transfer to finished stock. They were valued as follows:

£

Direct material

25500

Direct wages

10 200

Production overhead

20 400 (200% of direct wages)

During October, 37 000 further units were put into process and the following costs charged to the process:

£

Direct material

276 340

Direct wages

112 000

Production overhead

224 000

36 000 units were transferred to finished stock and 3200 units remained in work-in-progress at the end of October which were complete as to material and half-complete as to labour and production overhead. A loss of 1200 units, being normal, occurred during the process. The average method of pricing is used.

You are required to

(a) Prepare for the month of October, a statement (or statements) showing

(i) Production cost per unit in total and by element of cost;

(ii) The total of production transferred to finished stock;

(iii) The valuation of closing work-in-progress in total and by element of cost;

(b) Describe five of the characteristics which distinguish process costing from job costing.