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NanoTech Pte Ltd produces Product X through two departments: Department A and Department B. All direct materials are introduced at the start of the process. Conversion costs are incurred uniformly throughout the process. The following information pertain to Department A for June 20X9:

Work in process, 1st June Units

(100% complete, materials; 70% complete, labour and overhead) 10,000

Started during June 160,000

Work in process, 30th June

(100% complete, materials; 30% complete, labour and overhead) 18,000

 The costs of Department A work in process at 1st June were as follows:

Work in process, 1st June

Materials $102,000

Direct labour 69,000

Overhead 45,000

Total $216,000

The costs added by Department A during June were as follows:

Materials $2,040,000

Direct labour 880,650

Overhead 540,000

Total costs added $3,460,650

Required:

(a) Prepare a production report for Department A for June using the weighted average method. The report should disclose the physical flow of units, equivalent units, unit costs as well as the costs transferred out. 

(b) What are the possible pros and cons of weighted-average versus FIFO processing costing? 

 



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