1

A PROJECT REPORT ON THE TOPIC

Process costing.

Prepared by
Miss. Tejasvi Shivaji navale.
M. Com, 3rd Semester, in the subject
Advanced Cost Accounting

Under the guidance of

Prof. K.A.Shama

Submitted to
KDS Uran College of Comm./Arts.
Uran, Raigad.
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TABLE OF CONTENTS
Sr. No. Index Page No.
1. TITLE OF THE PROJECT 1

2. ACKNOWLEDGEMENTS 3

3. CERTIFICATE 4

4. DECLARATION 5

5. INTRODUCTION. 6-7

6. COST OF ELEMENTS. 8-12

7. VALUATION OF WIP. 13-15

8. OBJECTIVES OF THE STUDY. 16-17

9. RATIONALE BEHIND THE STUDY. 18-19

10. RESEARCH PROBLEM. 20

11. RESEARCH METHODOLOGY. 21

12. DATA ANALYSIS. 22-23

13. FINDINGS. 24-25

14. CONCLUSION. 26-27

15. SUMMARY. 28-29

16. ILLUSTRATIONS 30-35

17. BIBLIOGRAPHY. 36
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Acknowldgement
To list who wil have helped me in difficult because they are so enormous and the depth is so

enormous.

Iwould like to acknowledge the following as being idealistic channels and fresh dimensions

in the complection of this project.

Itake this opportunity to thank the Universith of Mumbai for giving me chance to do this

project.

Iwould like to thank my principle,....................for providing the necessary facilities required

for completion of this project.

I take this opportunity to thank our coordianator ..........,fir her moral support and guidance.

Iwould like to thank my college Liabrary, for having provede various reference books and

magazines related to y project.

Lastly, I would like to thank each and every person who directly or indirectly helped me in th

completion of the project especially my parents and peers who supported me throughout my

project.
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CERTIFICATE

This is to certify that Ms.Navale Tejasvi Shivaji, has worked and duly

completed her/his project work for the degree of Master in Commece in the subject

of Advanced Cost Accounts and her/his project is entitled Process costing under

my supervision I further certify that the entire work has been share by the learner

under my guidance and that the part of it has been submitted previously for any

Degree of Diploma of any university

It is her his own work and facts reported by her/his personal finding and

investigation.

Seal of
the college
Name and signature of

Guiding Teacher

Date of submission
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Declaration

I acknwoldge Miss/Mr Ms.Mhatre Divya surendra here by declare that the work

established in this project work that process Costing” forms my own conclusions in the

research work consist and under the guidance of Prof. K.A.Shama.is a result of my own

research work and has not been previously submitted in any where University his any other

degree/ Diploma to this of any other university.

Wherever reference has been made by previous works of others, it has been clearly indicated

as which and included in the bibliography.

I,here by further declare that all information of this documenthas been obtained and

prescribed in accordance with acadmic rules and ethical canduct

Name and Signature of the learner

Certified by

Name and signature of the Guiding Teacher

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INTRODUCTION TO COST ACCOUNTING

LEARNING OBJECTIVES

After studying this chapter, readers should be able to understand:

 The meaning of cost, accounting and cost accounting;

 The classification of costs;

 An objective / scientific ways of determining total cost of a product / service unit; and

 The qualities of a good cost accounting system.

INTRODUCTION

Business of all sizes - micro, small and medium and large scale and of all kind; profit and

not-for-profit making whether in the private or public sector needs information relating to the

cost of goods and services they produce and render. Cost accounting is relevant to these

businesses and organisations because it is one of the sources from which information

relating to cost can be obtained and effectively managed.

Cost Accounting, a subject that provides management with information

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relating to costs, is clearly a service to management. Management of a manufacturing or

service organisation, private sector or public sector organisation, profit-making or non-profit-

making organisation, military or civilian organisation would make sure that cost accounting

is accorded the necessary attention it deserves. The management of an organisation should

make sure that a department, section or unit is created to take care of the supply of cost

accounting information for managerial decision making.

COST DEFINED

In accounting, cost is defined as sacrifice rendered for benefit derived, while in economics it

is defined as alternative foregone. Therefore to economists, cost is what must be given up in

order to obtain something. If, for example, you part with ten naira (N10) to obtain a biro, the

cost of that biro is the ten naira (N10) you are parting with. When you sacrifice some

resources, for example, money, machines and materials in order to execute a project, the cost

of the completed project is the total monetary value of the resources sacrificed for the

project. Accountants, extending the perspective of economists, view cost as the value of

economic resources used in the production of goods, services, income or profit. This shows

that the accountant is always linking the concept of cost to production, as cost is being

incurred for the production of goods or services, the generation of revenue (income) or the

making of profit (negative, positive or zero). Cost elements, that is, materials, labour and

expenses, are, therefore, to be considered and aggregated before arriving at the ‘cost’ of

production. ‘Cost’ has its elements which can be classified in various ways and is to be

carefully identified in relation to various products or services, short term or long-term

projects, etc.

COST ELEMENTS
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These are the items of cost making up the total cost of a product or service. These items, to be

identified and aggregated, are as follows:

(a) Prime or Direct Cost:

This is made up of direct material costs, (DMC), direct labour costs (DLC) and direct

expenses (DE). Direct materials are those that actually become part of the product or service

while direct labour costs (wages) refer to the wages paid to employees for the time they are

engaged in working on the direct materials and other production inputs. Direct expenses are

expenses incurred specifically for the product or service.

(b) Factory Cost:

This is made up of prime cost plus the share of fixed production overhead costs chargeable to

the product or service. Fixed production costs are incurred in production, that is, overheads

incurred within the four walls of the factory. Factory cost is about total manufacturing cost of

a cost unit (product or service).

(b) Total Cost:

This would be given by the sum of factory cost plus the share of selling, administrative and

distributive overhead expenses attributable to the product or service. Selling expenses are

those incurred in inducing customers to place orders (advert and similar expenses).

Distributive expenses are those incurred in getting finished products to reach the customers.

They include warehousing, packaging and transportation expenses.

c)Administrative Expenses :
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Administrative expenses are those incurred in managing the enterprise. They include

management costs, accounts, legal and personnel department costs, audit fees and other

general administrative costs. For the apportionment of fixed production overhead expenses

and selling, distributive and administrative expenses, there is the need for the adoption of a

clear and acceptable method of apportioning overhead costs to departments or

products/services.

(c) Selling Price:

This is about the total cost, as identified above, plus target profit. Although, selling price is

not part of the cost elements of the seller, it is about cost of purchase to the buyer. The target

profit is to be projected by the management based on its pricing policy.

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ILLUSTRATION 1.

The management of Irruan Battery Manufacturing Company Limited is planning to fix a

selling price per unit of battery for the coming year. The cost accounting department presents

the following figures derived from cost records and estimates made to guide the management

in pricing decision:

Direct material cost per unit 220.00

Direct wages per unit 400.00

Variable overhead cost per unit 150.00

Total fixed production overhead cost 850,000.00

Total administrative expenses 1,400,000.00

Total selling and distribution expenses 750,000.00

The company uses per unit basis of apportioning fixed (general) overhead, and the planned

production for the year is 5,000 batteries. The figure represents about 60% of plant capacity

utilization; it is the maximum number that can be sold in the market. The company has a

policy of charging 70% of total cost as target profit. Required Compute the selling price per

unit of a battery in the company for the coming year.

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SOLUTION

The Prime cost, factory (total production) cost and actual total cost are to be computed before

arriving at the selling price. General overheads are to be apportioned using the planned

production level to determine cost per unit as follows:

Fixed production overhead cost per unit = 850,000/ 5000 = 170

Administrative expenses per unit = 1,400,000 / 5000 = 280

Selling and Distribution expenses per unit = 750,000/ 5000 = 150

Total Cost Per Unit and Selling Price Determination

Direct material cost 220

Direct wages cost 400

Direct Expenses 150

Prime Cost 770

Fixed Production overhead cost 170

Factory (Total Production ) cost 940

Administrative Expenses 280

Selling and Distributive Expenses 150

Total Cost 1,370

Target Profit (70% of N1370) 959

Selling price 2,329

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The selling price above might appear so low that the management might have to raise it up to

tally with the price obtaining in the market. It might also appear so high that the management

might have to bring it down to what obtains in the market. The management should, however,

think of making the price of its product very competitive (a little lower than the price of

competitors), bearing in mind the need to establish and maintain high quality of the product.

COST ACCOUNTING SENSE

Cost accounting sense refers to the need for organisations to critically and objectively trace

all the cost elements related to their products or services before arriving at their selling prices.

It involves pricing products or services scientifically based on accurate identification and

computation of actual total cost of a product or service. It is necessary if management of an

organisation is to be able to assess its performance profitability-wise, liquidity-wise or

productivity-wise.
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Process Costing : Valuation Of WIP

1. Valuation of WIP is the distinctive feature of process costing. It is done on the basis
of equivalent Production.
2. Equivalent Production = No. of Units in the process * % of work completed
3. Weighted Average Method.

Procedure

Step 1 Summarise the flow of physical units.

Step 2Complete the output in terms of equivalent units. Following formula should be used:

Equivalent Units Equivalent units Equivalent units completed and +Equivalent units
in the beginning +of work done in =transferred out in ending WIP
current period

Equivalent unit calculation in the weighted Average method is only concerned with the total

equivalent units of work done to date regardless of whether the work was done during the

previous period and is part of opening WIP, or whether it was done during the current period.

It means the method merges equivalent units in the beginning inventory with equivalent units

of work done in the current period.

Step 3 Compute equivalent units cost

The weighted average cost per equivalent unit is obtained by dividing the sum of

costs for opening WIP and costs of work done in the current period by total equivalent units

of work done to date.

Step 4 Summarise total costs to Account for.

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Step 5Assign costs to units completed and to units in ending WIP.

Cost to account for: Cost accounted for: Calculated at weightedAverage method

Opening WIP Completed and transferred out

*** Cost added In the courrent ***
period ***
Ending WIP
Total costs to account for ***
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FIFO First In First Out method

Under this method, it is assumed that the material in process moves on first in, first out basis.

The work on the opening stock is completed first, before the processing of the materials

introduced during the period. The units completed during the process being usually more than

the opening stock, it is assumed that no units from opening work in progress will be left

incomplete and none of them will be found in the closing work in progress. Under this

method, the cost of the period us worked out at two stages:

A) Opening work in process completed.

B) Units introduced and completed during the period.

The method is suitable for controlling cost as the costs are separated as current cost

and past cost. However, the calculation of cost is completed. This method is not much

used in practice.

C) Last in First out method.

Under this method the cost of opening work in process is charged to the closing work in

process instead of to the finished product units.

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Objectives of the study

The basic purpose of this Study is to equip financial officers and accountants with a tool they

can use in furthering cost accounting in their countries. This Study provides:

A description of how cost accounting can be used to assist governmental management

processes;

Information about what is happening in various countries and how cost accounting might be

adopted progressively and used in other than full accrual environments;

An understanding of the various cost concepts that can be used to satisfy government

information objectives and the related cost accounting processes;

A discussion of the accrual accounting issues whose resolution may affect the values used in

determining full costs;

Guidance on how to develop cost accounting systems, raising major issues that will need

resolution;

Adiscussion of various options for the design of cost reports for government managers;

Encouragement to involve senior managers in basic cost accounting issues, with suggestions

on how that might be done.

Although great similarities exist between the public and private sectors, a number of

governmental cost accounting issues have not yet been dealt with comprehensively in

existing literature. One study of value that covers some of these aspects is published by the
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International Monetary Fund, titled Effective Government Accounting (1995).006 The need

to overcome this gap in the literature and provide governmental perspectives is accentuated

by today’s pressures on governments to deal with shrinking budgets and meet demands for

improved services. Governments must cut costs wisely and take cost-related steps to improve

services. To do that they need applicable reference material on cost accounting.

Furthermore, governments do not yet make full use of cost accounting in those government

agencies which provide goods and services to the public without charge. As a result, many

government managers have little understanding of how to use cost accounting to improve

their operations. This accentuates the need for good reference material.

Even though cost accounting is today more of a management than an accounting exercise, the

PSC believes that government financial officers and accountants have important leadership

roles to play. They can provide much of the stimulus and knowledge needed to develop and

implement cost accounting. They can provide ―hands on‖ help to those in operating

management who must participate in development and implementation if this management

tool is to be used, and they can help to integrate the work of technical people, such as

information systems experts.

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Rationale behind the study

Cost accounting is one aspect of financial management and management control, and should

be used by program managers and others as a managerial tool in day-to-day operating

activities and by senior managers in their supervisory and evaluative roles. Although this

Study will be informative for non-accountant managers, they may find it beneficial to also

refer to other literature with a managerial perspective, such as the publications of IFAC’s

Financial and Management Accounting Committee (FMAC), including Management

Accounting Concepts (1998) which provides useful background, and Management Control

of Projects (1991) and The Capital Expenditure Decision (1989), which deal with the cost

accounting aspects of particular managerial issues and decisions.

Cost accounting for governments is continuously evolving. Since this Study was first released

for comment in December 1998 there has been considerable progress in implementing cost

accounting, new approaches and techniques have been developed and other countries not

cited in the Study have prepared descriptions of their approaches, e.g. Spain’s Contabilidad

Analítica Normalizada para Organismos Autónomos (C.A.N.O.A.) project. This Study has

been revised for comments received where revisions were deemed essential for reader

understanding.In-depth studies are needed on how cost accounting can contribute to decisions

and issues that are peculiarly governmental, such as decisions to privatize government-owned

enterprises and issues relating to government performance measurement and program

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evaluation. These special governmental decisions and issues are beyond the scope of this

Study.

Cost accounting is now viewed as an activity that provides information on costs and related

data to satisfy a variety of management needs for decision-relevant information. It is

concerned with how cost information is used in the management process and with the values

generated by the financial accounting system to the extent that they may affect the quality of

cost information.

Some reasons still cited for not using cost accounting include the following:

All citizens are served by the government without charge and the goods and services

provided are essentially governmental functions.

Many costs cannot be reliably calculated, e.g., natural resources.

Criteria for meaningful performance evaluation are lacking even if costs are known.

Government programs and projects are politically driven and cost is irrelevant or secondary.

Government budgets are on a cash basis and control of budgetary funds, not costs, is the only

or primary interest of legislators.

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Research Problem

As mentioned above, critical thinking and a good discussion with others is probably the best

approach to the initial problem analysis.

But when dealing with complex problems, you will still get stuck somewhere. In such a case,

using facilitating techniques to structure the discussions and using elements of decision

science can help.

This book covers what most other books on research methods do not cover: the thinking,

philosophy, reasoning, strategies and social interactions behind scientific research. The topic

is not easy, but the author illustrates the progression from vague ideas into research plans and

theories through examples from real research projects. The first section of the book is about

developing an analytical framework: conceptual and propositional analysis for defining

research problems, developing a research plan, theories, principles of measurement, methods

of reasoning, assessing postulates and philosophies behind different steps in scientific

research. While the examples in the first section come from ecological research, the whole

section is of use to researchers working in other disciplines, especially the parts on when to

assume something and when to investigate and the differences between axioms, postulates,

hypothesis and theory. As mentioned above, a good and well-structured discussion with

supervisors, colleagues, experts and outsiders is the best way to help a researcher or student

work through the initial problem analysis of his or her research project.
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RESEARCH METHODOLOGY

Every project should have some objectives. Without any objectives, it is not called as good
project. Every student must kept in mind that project will give good references to our future.
And It should have specific research methodology.

I used some methodology in my project report. Without using methodologies, no one can
done studies. It should usable in education. Mostly, in project, when we are collecting
information, it’s not easy thing.

I collected some information in own knowledge. And something from outsiders. i.e. Internet.

We can get lot of information in Internet. But, only copying is not good thing. We should
understand what points should taken or not. Which will be suitable for our project report?

First of all, I Just check out acknowledgements for writing my own. That time, I come to
know that It should have college name, principal name, supervisor and other helpers.

Then, I prepared declaration and certificate for project. Then I started to know about
introduction of project topic. It will helps us to know what we are doing. Next step is to know
history about that. It will show us a way how to go in next points. And what are the points
should involve in this project.

In this type, I collected information. Its my methodology of project report.

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Data Analysis

Cost accounting information is designed for managers. Since managers are taking decisions

only for their own organization, there is no need for the information to be comparable to

similar information from other organizations. Instead, the important criterion is that the

information must be relevant for decisions that managers operating in a particular

environment of business including strategy make. Cost accounting information is commonly

used in financial accounting information, but first we are concentrating in its use by managers

to take decisions. The accountants who handle the cost accounting information add value by

providing good information to managers who are taking decisions. Among the better

decisions, the better performance of one's organization, regardless if it is a manufacturing

company, a bank, a non-profit organization, a government agency, a school club or even

a business school. The cost-accounting system is the result of decisions made by managers of

an organization and the environment in which they make them.

Data Collection

1. Construct data accumulation systems for a cost accounting system

2. Create and review the controls needed for data accumulation and reporting systems .

Analysis

1. Conduct ongoing project resource constraint analyses

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2. Report on unit costs by project, department and process

3. Report on breakeven points by project, department, and processes

4. Report on margins by project, department and process both in process and completed

5. Report on cost variances and their causes

6. Report on project cost trends and prepare forecasts to complete projects.

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FINDINGS
The cost assignment in terms of outputs being the cost object will be discussed, but the

procedures are also generally applicable to other types of cost objects. Specific outputs

produced should be identified and, if practicable, measured in units. The costs of resources

that directly or indirectly contribute to the production of outputs should be assigned to

outputs through costing methodologies or cost-finding techniques. The assignment of

production cost should be performed using the following methods listed in the order of

preference wherever feasible and economically practicable:

• tracing direct costs to outputs;

• assigning indirect costs on a cause-and-effect basis; or

• allocating any remaining indirect costs on a reasonable and consistent basis.

There are many methods of direct tracing. They involve using quantities of resources

consumed and the actual unit cost of the resource.

They make use of:

• Time recording systems — Where each individual’s time is charged to particular outputs.

• Activity review — Such as time and motion studies, activity analysis and time sampling.

• Inventory records and other resource management records — Charging outputs for
withdrawn

inventory or usage of computers, telephones, etc.

• Output accounting records — Costs assigned to output codes in the general ledger as
incurred.
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The idea of this economic accounting originated with Jules Dupuit, a French engineer whose

1848 article is still worth reading. The British economist, Alfred Marshall, formulated some

of the formal concepts that are at the foundation of CBA. But the practical development of

CBA came as a result of the impetus provided by the Federal Navigation Act of 1936. This

act required that the U.S. Corps of Engineers carry out projects for the improvement of the

waterway system when the total benefits of a project to whomsoever they accrue exceed the

costs of that project.

Thus, the Corps of Engineers had created systematic methods for measuring such benefits

and costs. The engineers of the Corps did this without much, if any, assistance from the

economics profession.
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Conclusion

Cost accounting has a number of important uses in the efficient and effective management of

government. It is a valuable tool for the management of general fund organizations as well as

for commercial type activities. But the measurement difficulties associated with some of its

applications should be recognized.

The use of cost accounting is likely to become even more widespread than it is today as more

successes are reported and the use of accrual accounting spreads. In appraising how to

improve the quality of available information, governments should consider the advantages of

using cost accounting for management purposes in addition to the advantages of accrual

accounting for financial reporting. There are a number of approaches that governments in

different circumstances can adopt to move progressively to implement cost accounting.

The cost concepts used in the cost accounting exercise depend upon the objectives of the

exercise. Full cost will satisfy several important objectives. Selected components of full cost

will satisfy others or provide some of the needed data. The processes used in the cost

accounting exercise to implement the cost concepts will determine whether and to what

degree the objectives will be achieved. The choices of concepts and processes are
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interrelated and important judgments must be made by top management and by operating and

financial management. These choices are also related to financial accounting choices

elaborates on senior management’s role in making these choices.

There are a number of potential differences between financial accounting standards and cost

accounting concepts. Issues concerning the applicability of financial accounting standards to

cost accounting are considered by the PSC when developing International Public Sector

Accounting. Standards and by those in government who adopt accounting standards. These

considerations can have significant effects on reported operating results. If different concepts

are adopted for cost accounting, then reconciliations will be required if there is to be

understandability and acceptance of the costrelated data presented in cost and performance

reports.

Even with reconciliations, significant inconsistencies may cause confusion and loss of

credibility of the information presented. Also, if they are dealt with differently, there will be

some difficulties in developing efficient and effective cost systems needed for financial and

cost accounting. It seems clear that financial accounting standards And cost accounting

concepts should be addressed concurrently and differences should be minimized.

This framework can be easily adapted depending on the available time and the level of skills

and experience of the participants. If the level of the participants is rather low, it can be

incorporated in a one-week data management course that focuses on data management using

Excel. The first days, the resource person can give some short lectures and exercises,

followed by work on their data. Then ask the participants to give their presentation and

present the evidence using a table with means or a graph. Based on the problems that surface

during the presentation, the resource person can add some additional lecture modules,

demonstrations and exercises. In most presentations there will be inconsistency between the
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different steps, the problem and study objectives will be vaguely stated, the evidence will not

answer the hypothesis, graphs and tables will be difficult to interpret and the interpretation

and conclusion will not be based on the evidence provided by the data.

Summary

Cost accounting is an approach to evaluating the overall costs that are associated with

conducting business. Generally based on standard accounting practices, cost accounting is

one of the tools that managers utilize to determine what type and how much expenses is

involved with maintaining the current business model. At the same time, the principles

of costaccounting can also be utilized to project changes to these costs in the event that

specific changes are implemented.

When it comes to measuring how wisely company resources are being

utilized, costaccounting helps to provide the data relevant to the current situation. By

identifying production costs and further defining the cost of production by three or more

successive business cycles, it is possible to note any trends that indicate a rise in production

costs without any appreciable changes or increase in production of goods and services. By

using this approach, it is possible to identify the reason for the change, and take steps to

contain the situation before bottom line profits are impacted to a greater degree.
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Product development and marketing strategies are also informed by the utilization

of costaccounting. In terms of product development, it is possible to determine if a new

product can be produced at a reasonable price, considering the cost of raw materials and the

labour and equipment necessary to product a finished product. At the same time, marketing

protocols can make use of cost accounting to project if the product will sell enough units to

make production a viable option.

Cost accounting is helpful in making a number of business decisions. By weighing the actual

costs versus the anticipated benefit, cost accounting can help a company to avoid launching a

product with no real market, prevent the purchase of unnecessary goods and services, or alter

the current operational model in a manner that will decrease efficiency. Whether utilized to

evaluate the status of a department within the company or as a tool to project the feasibility of

opening new locations or closing older ones, cost accounting can provide important data that

may impact the final decision.

Accounting shapes our lives. It changes organizations and alters our social, economic and

physical environment. Whether or not we engage in producing and/or reading accounting

information, it influences what we can and cannot do. Corporate decisions regarding new

product developments, pricing strategy, staff recruitment and salary levels are generally

influenced by accounting information. The way in which a manager acts is often associated

with how he or she reacts to accounting data. At times, accounting motivates certain types of

behaviour and discourages others. In most organizations, decisions, actions and human

behaviour find direct links with the nature, use and focus of accounting information. This

course is about understanding the preparation and use of management and cost accounting

information in this light.

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Illustration 1

From the following information prepare Process account as per FIFO assumption:

Opening Stock – 800 units @ ₹ 4,800.

Degree of completion: Material 60%, Labour 40%, Overheads 40%.

Transfer from previous process : 12,000 units costing ₹ 16,350. Transfer to next process : 9,700 units.

Units scrapped 1,300 units Normal loss 10%, Closing stock : 1,800 units.

Degree of completion for units scrapped: Material 100%, Labour 50%, Overheads 50%.

Degree of completion for closing stock: Material 60%, Labour 50%, Overheads 50%.

Scrap realised ₹ 1.00 per unit.

Other information

Material – 10,500

Labour – 20,760

Overheads – 16,470
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Sollution

Statement of Equivalent Units

Units
Reconciliation Equivalent units
Particulars Input Output Materials Labour Overheads
% % %
  Com. Units Com. Units Com. Units
1) Opening WIP 800 800 40% 320 60% 480 60% 480
2) Fresh units
introduced 12,000 - - - - - - -
3) Fresh units
completed - 8,900 100% 8,900 100% 8,900 100% 8,900
4) Normal loss - 1,100 - - - - - -
5) Abnormal loss - 200 100% 200 50% 100 50% 100
6) Closing WIP - 1,800 60% 1,080 50% 900 50% 900
10,50 10,38 10,38
Total Units (A) 12,800 12,800   0   0   0

Statement of cost per units Equivalent

Particulars Material Labour Overheads Total

CPEU :        
1) Cost of units introduced. 16,350 - - 16,350
2) Cost incurred during process 10,500 20,760 16,470 47,730
(-) Normal loss -1,100 - - -1,100
Total cost (B) 25,750 20,760 16,470 62,980
EU (A) 10,500 10,380 10,380  
CPEU B/A 2.4523 2 1.5867 6.039

Statement of Cost apportionment

Pariculars EU CPEU ₹ Total ₹

1) Cost of opening WIP
completed        
Materials 320 2.4523 785  
Labour 480 2 960  
Overheads 480 1.5867 762 2,507
2) Cost of fresh units completed: 8,900 6.039 - 53,747
3) Cost of Abnormal loss :        
Materials 200 2.4523 490  
Labour 100 2 200  
Overheads 100 1.5867 160 850
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4) Cost of closing WIP

completed :        
Materials 1,080 2.4523 2,648  
Labour 900 2 1,800  
Overheads 900 1.5867 1,428 5,876
        62,989

Statement of cost transferred to next process

Cost of opening WIP 4,800

Cost of opening WIP completed now 2,507
Cost of fresh units completed 53,747
  61,054

Process A/c

Particulars Units ₹ Particulars Units ₹

To, units introduced 800 4,800 By normal Loss 1,100 1,100
To, opening WIP 12,000 16,350 By transferred to next process 9,700 61,054
To, Material   10,500 By closing WIP 1,800 5,876
To, labour   20,760 By abnomal loss 200 850
To, overheads   16,470
12,800 68,880 12,800 68,880
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Illustration 2

Weighted Average Method

From the following details prepare statement of equivalent production, statement of cost and
find the value of :
a) Output transferred and
b) Closing work in progress
Opening WIP (units) 2,000
Material (100% complete) ₹ 7,500/-
Labour (60% complete) ₹ 3,000/-
Overheads (60% complete) ₹ 1,500/-
Units introduced inthis process 8,000
There are 2000 units on process of the end and the stage of completion is estimated to be:
Material 100%
Labour 50%
Overheads 50%
8,000 units are transferred to next process.
The process costs for the period are :
Material ₹ 1,00,000/-
 34

Labour ₹ 78,000/-
Overheads ₹ 39,000/-

Sollution

Statement of Equivalent Units

Units
Reconciliation Equivalent units
Particulars Input Output Materials Labour Overheads
% % %
  Com. Units Com. Units Com. Units
1) Opening WIP 2,000 - - - - - - -
2) Fresh units
introduced 8,000 - - - - - - -
3) Fresh units
completed - 8,000 100% 8,000 100% 8,000 100% 8,000
6) Closing WIP - 2,000 100% 2,000 50% 1,000 50% 1,000
Total Units (A) 10,000 10,000   10,000   9,000   9,000

Statement of cost per units Equivalent

Particulars Material Labour Overheads Total

CPEU :        
1) Cost of opening WIP. 7,500 3,000 1,500 12,000
2) Cost incurred during process 1,00,000 78,000 39,000 2,17,000
 35

Total cost (B) 1,07,500 81,000 40,500 2,29,000

EU (A) 10,000 9,000 9,000  
CPEU B/A 10.75 9 4.5 24.25

Statement of Cost apportionment

Pariculars EU CPEU ₹ Total ₹

1) Cost of units completed:  8,000 24.25 - 1,94,000
2) Cost of closing WIP:
Materials 2000 10.75 21,500  
Labour 1000 9 9,000  
Overheads 1000 4.5 4,500 35,000
        2,29,000

Process A/c

Particulars Units ₹ Particulars Units ₹

To, opening WIP 2,000 12,000 By transferred to next process 8,000 1,94,000
To, Material  8,000 1,00,000 By closing WIP 1,800 5,876
To, labour   78,000
 36

To, overheads   39,000

12,800 68,880 12,800 68,880

Bibliography

Bibliography, as a discipline, is traditionally the academic study of books as physical,

cultural objects; in this sense, it is also known as bibliology. I bought these information from

the Internet.

Descriptive bibliographers follow specific conventions and associated classification in their

description. Titles and title pages are transcribed in a formal style and representation.

Illustration, typeface, binding, paper, and all physical elements related to identifying a book

follow formulaic conventions.

I followed following Links:

www.google.com.
 37

www.yahoo.com.

www.scribd.com.

Yahoo answers.

Advanced Cost Accounting – Sheth Publishers.