Process Costing 8.

lustration 8.1
cost of production from the data given below
Prepare process accounts and calculate total Process Z
Process X Process Y

2,250 750 300

Materials 900
1,200 3,000
Labour
Direct expenses: 200 400
300
Fuel 300 100
200
Cariage 1,890 2,580 1,875
Works overheads (B. Com.)
on the basis ofwages.
The indirect expenses 1,275 should be apportioned

Solution
h a s a n y value

lustration 8.2
of process A.
The following information
is iven in respect
1,000 kg. @7 6 per kg.
Materials 75,000
Labour 7 1,000
Direct expenses
A 7 1,000. Normal wastage 10% of input
Indirect expenses allocated to Process

Prepare Process A Account when:

(a) Scrap value of normal loss is nil. value of Re. 1 per unit.
(b) Scrap arising out of normal has a sale
 Ilustration 8.3
Fifty
r y units are introduced into a process at a cost of rupee one each. The total additional
expenditure incured in the Process is 7 30. Of the units introduced, 10% are normally spoiled in the
course ofmanufacture, these possess a scrap value of Re. 0.25 each. Owing to an accident, only 40
umts are produced. You are required to prepare (i) Process Account, and (iü) Abnormal LoSsAccount.
(E. Com. Madras; Hons. Delhi)
Solutian.
Ilustration 8.4
A product passes through three processes A, B and C. The normal wastage of each process is as
follows: Process A - 3 per cent, Process B 5 per cent, and Process C 8 per cent. Wastage of Process
Awas sold at 25 P. per unit, that of Process B at 50 P. per unit and that of Process C at Re. 1 per unit.
10,000 units were issued to Process A on 1-4-2004 at a cost of Re. 1 per unit. The other costs were
as follows:
Process A Process B Process C
Sundry materials 71,000 7 1,500 500
Labour 5,000 8,000 6,500
Direct expenses 1,050 1,188 2,009
Actual output 9,500 units 9,100 units 8,100 units

epare the Process Accounts, assuming that there were no opening or closing stocks. Also give the
Abnormal Wastage and
Abnormal Gain Accounts.
(BBM Bangalore Adapted, B. Com., Mysore)
CC.

lustration 8.5 L

Chemicals Ltd. processes a patent maternal used in buildings. The material is produced in three
consecutive grades- soft, medium and hard.
Process I Process II Process I

1,000 tonnes
Raw materials used
200
Cost per tonne 10,710
87,500 39,500
Manufacturing wages and expenses. 20%
Weight lost (% of input of the process) 5% 10%
30 tonnes 51 tonnes
50 tonnes
Scrap (sale price 50 per tonne) 7350 500 800
Sale price per tonne
o
10,000. Two third of the output
anagement expenses were17,500 and selling expenses
and the balances
Process II are passed on to the next process
OCess and one half of the output of
ae sold. The entire output of Process III is sold.
where neces
and a statement of profit. Make approximations, Bangalore)
the three process accounts Andhra,
de (B Com. Delhi,
sary.
Problem 8.3
a Process Account, Abnomal Gain Account and Normal
From the following information, prepare
Loss Account:
840 units@ 7 40 per unit.
() Input of raw material
(i) Direct material 75,924.
(in) Direct wages 8,000
(iv) Overheads 8,000
750 units
(v)Actual output
(vi) Normal loss 15%
10 per unit. (B.Com. Delhi)
(vi) Value of scrap per unit
Problem 8.5

Rroduct Bis obtained after it passes through three distinct proceses. The following information is
obtained from the for the week
accounts ending31st October,2012:
Items Total Process

Direct materials 7,542 2,600 1,980 2,962

Direct wages 9,000 2,000 3,000 4,000
Production overhead 9,000
1,000 units at 7 3 each were introduced to Process I. There was no stock of material or work-in-
progress at the beginning or at the end of the period. The output of each process passes direct to the
next process and finally to finished stock. Production overhead is recovered on 100% of direct wages
The following additional data are obtained:
Process Output during the Percentage of normal Value of sCrap
week loss to input per unit
Process I 950 5% 2
Process II 840 10% 4
Process II 750 15% S
pare prOcess cost accounts
and abnormal gain or losS accounts. (BB.M. Bangalore)
Problem 8.10
XYZ Ltd. mnufactures and sells three chemicals produced by consecutive processes known
as X.?
and Z. In each process 2% of the total weight put in is lost and 10% is scrap, which from
and Y realised 100 a tonne and from Z 7 200 a tonne. The products of
processes
the three processes are dealt
with as follows
X Y
Sent to warehouse for sale
25% 50% 100%
Passed on the next process
75% 50%
The following particulars relate to the month
of May:
Materials used (tonnes)
Cost per tonne of materials 1,000 140 1,348
( 120 200 80
Mfg. expenses ()
30,800 25,760 18,100
Prepare an account for each process,
showing the cost per tonne of each
products. (Adapted)
Solution