Persad plc is a manufacturing business. The following figures have been extracted from the company's ledgers as at 31 May 2014.

Additional information: 

• At 31 May 2014, inventories were valued as follows: raw materials $22 170; work in progress $13 750; finished goods $60 650. 

• At 31 May 2014 factory wages due but unpaid amounted to $8000. One-quarter of this was for indirect labour and the remainder was for direct labour. 

• Depreciation of factory machinery for the year ended 31 May 2014 was $25 000. 

Required

a. Prepare the manufacturing account for the year ended 31 May 2014. 

b. Explain what is meant by 'work in progress' 

c. Calculate the production cost per unit, assuming 35,000 products were made.

Transcribed Image Text:

Inventories at 1 June 2013 raw materials 21 450 work in progress 14 780 finished goods 58 620 Revenue 657 000 Purchases of raw materials 234 090 Direct labour costs 260 000 Indirect labour costs 82 800 Factory overheads (excluding indirect labour costs and depreciation) 138 000 Returns inwards 1 000 Returns cutwards of raw materials 980 Carriage inwards on raw materials 750 Carriage outwards 1 340