Proudly Paper Corporation manufactures cardboard boxes. In the year just completed the following results were recorded:
During the year, 100 000 boxes were started in production. Of these, 10 000 were rejected at the quality inspection process, which occurred two-thirds of the way through the production process. All materials are added at the beginning of the production process and conversion costs are incurred uniformly throughout the process.
1. Prepare a schedule analysing the physical flow of units and calculating the equivalent units of both direct material and conversion. Use weighted average process costing.
2. Now would your approach differ using the FIFO method?