Equivalent production with no losses (FIFO Method)

A company operates a manufacturing process where six people work as a team and are paid a weekly group bonus bases upon the actual output of the team compared with output expected. A basis 37 hour week is worked during which the expected output from the process is 4000 equivalent units of product. Basis pay is £0.80 per unit in excess of expected output. In the week just ended, basis hours were worked on the process. The following additional information is provided for the week:

Opening work in process (1000 units);

Materials and overheads £355 (50% complete).

During the week:

Materials used £2255

Overheads incurred £1748

Completed production 3800 units

Closing work in process (1300 units)

Materials (100% complete)

Labour and overheads(75%complete).

There are no process losses.

The FIFO method is used to apportion costs.


(a) Prepare the process account for the week just ended.

(b) Explain the purpose of the following documents which are used in the control of, and accounting for, the materials used in the process described in park (a)

(i) Purchase requisition

(ii) Materials (stores) requisition.