QUESTION
Syarikat Jenin using process costing to gather information on production costs. All direct materials are
added at the beginning of the process and conversion costs are evenly incurred throughout the
production process. A review of Work in Process Account for August shows the following
information:
Debit Section
Beginning balance: units, completed, costs RM
Production start units: units
Direct materials involved in August: RM
Conversion costs incurred in August: RM
Credit Section:
Units completed and transferred out: units
Supporting documents show direct material costs RM and conversion costs
RM
Interview with production personnel found that the Work in Process balance is completed.
Required:
a Explain the main differences between the average method and first in first out FIFO method in
the process costing system.
b Calculate the physical unit flow.
c For each method in a calculate:
i Unit equivalents for direct material and conversion costs
ii Cost per unit equivalent for direct material and conversion costs.
iii Total costs for unit transferred to finished goods inventory.
