Process Costing – Case 1

A chemical is made by three sequential processes, A, B and C. In process C, a

by-product arises and after further processing in process XY, at cost of Rs. 2 per
unit, product ‘XYZ’ is produced. Selling and Distribution expenses of Rs. 1 per
unit are incurred in marketing ‘XYZ’ at a selling price of Rs. 9 per unit. Other
information in respect of A, B and C is as follows:

Particulars Process A Process B Process C

Normal Loss 10% 5% 10%

Scrap Value of Normal Loss Rs. 1 Rs. 3 Rs. 5

Material introduced (10000 units) 20000

Direct Materials 6000 12640 23200

Direct Wages 5000 6000 10000

Direct Expenses 4000 6200 4080

Output (Units) 8800 8400 7000

Budgeted Production Overhead for the month was Rs. 84000. These are
allocated as a percentage of direct wages. Output of by product in Process C is
420 units, valued at Rs. 2520. There is no stock at the beginning or end of the
month.

Prepare all the relevant statements?