A company has a continuous process, making components which are partially used in the company's own products and partially sold on to other industrial customers.

The company uses the Weighted Average method of process costing.

The process has an expected normal wastage of 5% based on material introduced. This wastage is detected on completion.

For the month of April the following activity occurred:

Opening work in progress: 6000 Units

Material 100% complete 42,000

Labour and overheads 40% complete 48,000

During the month the following resources were used:

Material for 80,000 units was introduced 640,000

Labour and overheads cost 1,760,000

During of the month:

Units completed and transferred: 50,000 units

Units completed and sold to customers:24,000 units @ 50 selling price

Closing work in progress: 3000 Units

Material 100% complete

Labour and overheads 60% complete

Required:

a)Calculate the abnormal gain or loss in units for April.(4 marks)

b)Calculate the cost per equivalent unit using the Weighted Average method.

(8 marks)

c)Show the process account, for the month of May allocating the costs appropriately to:

Finished goods completed and transferred.

Finished goods completed and sold

Amounts transferred to gains and losses account

Closing work in progress.(4 marks)

d)Calculate the manufacturing profit made on the sold units.(1 mark)

e)Briefly explain how the costs you have calculated are used in decision making in the company.(3 marks)