# Unit 6 - Work in Progress &amp; Process Accounts

Registered Posts: 2 New contributor ?
Hi,

Anyone able to help with the following?

The process comprises of 3 stages: grinding, mixing & packing.

The information for the month is...
Inputs into grinding cost centre are:
Raw materials 1000 tonnes @ £70/tonne
Direct Labour 475 hours @ £8/hour

Outputs from grinding transfered to mixinng stage 940 tonnes
W.I.P 60 tonnes which is 100% complete materials, 50% complete labour & overhead.

Can you draft the process account for grinding for the month and value the W.I.P?

So far im having little success at matching any sort of answer i get to the answer booklet!

INPUT
Materials - 1000 units - £70000
Labour - £3800

Any help is appreciated...Thanks :thumbup:

• Registered Posts: 218 ? ? ?
This is the question on Equivalent Unit, to work out how much is the work in progress on the shop floor is worth.
To understand equivalent unit concept:
Suppose that you have 2 children and you have 3 bars of Cadbury chocolate. 1 bar a whole= 100% 2nd bar is ¾ = 75% and the 3rd bar is a ¼= 25%
How will you share the 3 bars of chocolate equally among your
Answer 1+3/4+1/4 = 2 divide by 2 = 1 whole bar of chocolate each.
Therefore one child will receive 1 whole bar while the other child will receive 2 partial bars.

Similarly
………………………………………………………………………………………………….485 hrs @£8 p/hr
Does not sound right……………………………………………………………………………………………..£17,500
………………………….....…………………………………………./Units…………………..Units………………….Units
Total..................................1000……………….…£70,000…………..……£3,880……………..£17,460
% completed Units.……….....……940..……100%.......940 units….100%...940 unit...100%....940 units
% partial Equivalent units….....60..………100%........60 Units……50%......30 units…50%......30units
Total Equivalent units……………...……………...…………1000 Units……………..970units…………..970units
Cost per Equivalent unit………………………...………...£70.00…………………...£4.00..................£18.00
Fully completed unit costs…-940 units………...…..£65800………………...£3,760…………………£16,920 (86,480)
w-i-p- costs………………………..…60 units………...…….£4200.(30 units)……..£120…(30 units)…..£540 (£4,860)
Total………………………………………………………....……..£70,000…………………..£3,880…………………£17,460 (91,340)
• Registered, Moderator Posts: 2,034
I agree with Visha
I had the benefit of a spreadsheet so I was able to use unrounded cost per equivalent unit figures, but I have a question.

I saw the line with
Does not sound right
Is that why your total costs for labour and overheads are different from the first posting at £3880 rather than £3800 labour
and £17,460 rather than £17,500 overhead?
Sandy
[email protected]
www.sandyhood.com
• Registered Posts: 218 ? ? ?
if you divide (475*8) 3800= labour BY 970- the cost per unit comes to £3.92

and £17500 overheads by 970 it comes to £18.04

My experience has been that the examples in the text books or generally in the exam papers, the cost of the units will be either a whole number or with a sensible decimal number such as £0.75 or £0.25

if the charge had been £4.00 per unit then the costs would have been £3880 or 485 hrs at £8

similarly the overhead charge of £18 per unit comes to £17460