Question 2 (40 marks) Namibia Cleaning Agents ("NCA") is a company based in Okahandja that produces and sells a cleaning agent. Due to the sophistication of the production process, NCA uses a process costing system to value its inventory. The production requires that inspection is done at the end of the process and a normal loss of 5% is anticipated at inspection. The following information relates to the production process for July 2022: Units Opening inventory of work in progress (25% completed) 105 000 Units introduced 225 000 Units transferred to assembly department 270 000 Closing inventory of work in progress (85% completed) 30 000 Opening Cost (N$) Material 487 500 Conversion 192 000 Cost incurred in current period: Material 840 000 Conversion 2 700 000 FACULTY OF COMMERCE, MANAGEMENT AND LAW Page 11 of 16 REQUIRED Marks Subtotal Total 2.1. Prepare the process cost report for the cutting department using the First In, First Out (FIFO) method. (Show all your workings, and where possible, round off your final answers to two decimal places). 17 17 2.2. Prepare the process cost report for the cutting department using the Weighted Average Cost (WACO) method. (Show all your workings, and where possible, round off your final answers to two decimal places). 17 34 2.3. Explain why the two methods gives different unit costs of finished goods and work in process. 3 37 2.4 Which of the two methods would you recommend to NCA and why? 3 40