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The working that was given for this question was a bit confusing. It came from my ACCA text. Could you assist?
A chemical is manufactured in two processes, X and Y. Data for process Y for last month are as follows.
Material transferred from process X 2000 liters @ $4 per litre
Conversion costs incurred $12,240
Output transferred to finished goods 1600 liters
No losses occur in the process.Closing work in progress is fully complete for material, but is only 50% processed.
What is the value of the closing work in progress (to the nearest $)?
Have you watched the free lectures on process costing?
Materials will be valued at $ per litre.
For conversion costs, the amount spent is $12,240.
The equivalent units are 1600 finished plus 400 (2000 – 600) that are only 50% finished, so 1800 equivalent units. So the conversion costs are 12,240/1800 = $6.80 per unit.The work-in- progress will be valued at $4 per unit in respect of materials, and 50% x $6.80 per unit in respect of conversion costs (since they are only 50% processed).
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