On 30 October the following were among the balances in

On 30 October the following were among the balances in the cost ledger of a company
manufacturing a single product (Product X) in a single process operation:
Dr Cr
Raw material control account £87 460
Manufacturing overhead control account £5 123
Finished goods account £148 352
The raw material ledger comprised the following balances at 30 October:
Direct materials:
Material A: 18 760kg £52 715
Material B: 4 242kg £29 994
Indirect materials: £4 751
12 160kg of Product X were in finished goods stock on 30 October. During November the
following occurred:
(i) Raw materials purchased on credit:
Material A: 34 220kg at £2.85/kg
Material B: 34 520kg at £7.10/kg
Indirect: £7 221
(ii) Raw materials issued from stock:
Material A: 35 176kg
Material B: 13 364kg
Indirect: £6917
Direct materials are issued at weighted average prices (calculated at the end of each month to
three decimal places of £).
(iii) Wages incurred:
Direct: £186 743 (23 900 hours)

Indirect: £74 887
(iv) Other manufacturing overhead costs totaled £112 194. Manufacturing overheads are
absorbed at a predetermined rate of £16.00 per direct labor hour. Any over-/under- absorbed
overhead at the end of November should be left as a balance on the manufacturing overhead
control account.
(v) 45 937kg of Product X were manufactured. There was no work in progress at the beginning or
end of the period. A normal loss of 5 per cent of input is expected.
(vi) 43 210kg of Product X were sold. A monthly weighted average cost per kg (to three decimal
places of £) is used to determine the production cost of sales.
Required:
(a) Prepare the following cost accounts for the month of November:
Raw material control account
Manufacturing overhead control account
Work in progress account
Finished goods account
All entries to the accounts should be rounded to the nearest whole £. Clearly show any workings
supporting your answer.
(b) Explain the concept of equivalent units and their relevance in a process costing system.