The quantity specified on a production order was 5,000 units of an article in the manufacture of which four operations were involved. The piece rates for these four operations were in the following sequence: Rs. 30; Rs. 40; Rs. 30; and Rs. 50 per unit. The company recovered factory overhead expenses based on direct labour cost, and the current overhead rate is 75%. The entire quantity of material authorized for the order, namely, 2000 kg @ Rs. 300 per kg, was issued to the shop. Of this, 100 kg was returned as scrap arising in course of manufacture, valued at Rs. 2,000.
At the year end, the order was incomplete; only 500 units were fully completed and transferred to finished stock. Stock-taking of the work-in-progress revealed the following position:
|
Material in process: |
1,400 kg |
|
Material in hand, in shop (unprocessed): |
300 kg |
|
Production in partly completed stage: |
4,000 units |
Extent of work performed:
|
Up to first operation stage: |
2,000 units |
|
Up to the second operation stage: |
1,500 units |
|
Up to the third operation stage: |
500 units |
|
Up to the fourth operation stage: |
nil |
You are required to compare the cost of the work-in-progress.