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IM4.3 Intermediate: Integrated accounts and stores pricing. 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: Cr Dr 87460 Raw material control account Manufacturing overhead control account Finished goods account 5123 148352 The raw material ledger comprised the following balances at 30 October: Direct materials: Material A: Material B: Indirect materials: 18 760kg 4242kg 52 715 29994 4751 12 160kg of Product X were in finished goods stock on 30 October. During November the following occurred: (1) Raw materials purchased on credit: Material A: Material B: Indirect: 34220kg at 2.85/kg 34520kg at 7.10/kg 7221 (ii) Raw materials issued from stock: Material A: Material B: Indirect: 35176kg 13364kg 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: Indirect: 186 743 (23900 hours) 74887 (iv) Other manufacturing overhead costs totalled 112 194. Manufacturing overheads are absorbed at a predetermined rate of 16.00 per direct labour hour. Any over-/under-absorbed overhead at the end of November should be left as a balance on the manufacturing overhead control account. (v) 45937kg 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. (16 marks) (b) Explain the concept of equivalent units and its relevance in a process costing system. (4 marks) ACCA Management Information Paper 3

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