Question 3 Jones Manufacturing Co. Ltd. makes a product by way of three consecutive processes. Inspection takes place during the processing operation, at which point bad units are separated from good units and sold as scrap at $20 each. Normal losses are estimated to be 5% of input during the period. The following data relates to process 2 for the month of October. During October, 20,000 units valued at $400,000 were transferred from process i to process 2. Other costs incurred during the month were: Direct material added $272,000 Direct labour Production overheads $254,000 $ 120,400 At inspection, 3000 units were rejected as scrap. These units had reached the following degree of completion: Transfer from process 1 100% 80% Direct material added Conversion costs 50% Work-in-progress at the end of October was 4,000 units and had reached the following degree of completion: Transfer from process i 100% Direct material added 60% Conversion costs 40% There were no unfinished goods in process 2 at the beginning of the period.

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Manufacturing Costs

Manufacturing cost is the total cost of procuring or producing a product. In other words, the manufacturing cost is the cost that an individual or business owner undertakes for the manufacturing of goods.