Eton Ltd. operates a manufacturing process that produces product A.
Information for this process last month is as follows:
(a) Opening work in progress – 2,500 kg valued at £2,000 for direct material and £1,500 for labour and overheads.
(b) Materials input – 25,000 kg at £2.10 per kg.
(c) Labour – £10,000
(d) Overheads – £5,000
(e) Output during the month – 20,000 kg.
(f) There were 7,500 units of closing work in progress which was complete as to materials and 30% complete as to conversion.
(g) Normal loss for the month was 3% of input and all losses have a scrap value of £1 per kg.
What was the average cost per kg of finished output during the month?
A. £1.73
B. £2.72
C. £2.78
D. £2.80
Answer: C