PROCESS COSTING: PART A

QUESTIONS

Dr Manisha Bhavsar
Associate Professor in Accountancy
H L College of Commerce
Question 1 Eg 29 Pg 71
A product of Samarth Ltd passes through three processes before it is transferred to
finished stock. From the following information, prepare process accounts and other
necessary accounts.
Particulars Process 1 Process 2 Process 3
Units introduced (at Rs 25.25 per 20 units) 40,000 - -
Direct labour (Re per unit introduced) 0.75 0.65 0.50
Direct expenses (Rs) 7,392 10,416 13,368
Indirect expenses (% on direct labour) 35 40 50
Normal wastage (% of input) 2 4 ?
Selling price of wastage (Rs per unit) 0 2.50 3.00
By-product (% of input) 5 - -
Selling price of by-product Cost + 10% - -
Abnormal gain (units) - - 264
Actual output ? 88% of input 31,500 units

Dr Manisha Bhavsar, HLCC 2

Question 2 Eg 23 Pg 67
A product of Pragnesh Ltd passes through three processes before it is transferred to finished stock.
From the following information, prepare process accounts and other necessary accounts.
Particulars Process A Process B Process C
Units introduced (at Rs 50 per unit) ? - -
Normal wastage (% of input) 5 10 20
Selling price of wastage (Rs per 10 units) 300 500 800
Abnormal wastage (units) 50 - -
Abnormal gain (units) - - 118
Normal cost of normal output (Rs per unit) 100 150 220
Actual output (units) 1,850 ? ?
Factory overheads are to be calculated as under:
Process A 50% of direct wages
Process B 85% of direct wages
Process C 100% of direct wages

Dr Manisha Bhavsar, HLCC 3

Question 3 Eg 36 Pg 75
Production of Cotton passes through three processes before it is transferred to finished stock. From
the following information, prepare process accounts and other necessary accounts.
Particulars Dyeing Printing Finishing
Units introduced (at Rs 20 per unit) ? - -
Normal wastage (% of input) 3 5 10
Selling price of wastage (Rs per 10 units) 30 60 80
Abnormal wastage (Cost per unit Rs 30) 300 units - -
Abnormal gain (Cost per unit Rs 50) - - 300 units
Cost per unit of normal production (Rs) - 40 -
Actual output ? ? ?
Factory overheads are estimated at 100% of direct wages in all processes.
Abnormal wastage is 1/3 rd part of the normal wastage in Dyeing Process.

Dr Manisha Bhavsar, HLCC 4

Question 4 (GU Nov 2013)
A product passes through three processes before it is transferred to finished stock. From the
following information, prepare process accounts and other necessary accounts.
Particulars Process A Process B Process C
Units introduced (at Rs 100 per unit) ? - -
Normal wastage (% of input) 10 20 30
Selling price of wastage (Rs per unit) 50 100 125
Abnormal wastage (Cost per unit Rs 200) 50 units - -
Abnormal gain (Cost per unit Rs 500) - - 14 units
Actual output (Cost per unit Rs 300) ? 680 units ?
Factory overheads except raw material (Rs) ? 51,000 ?
Ratio between direct and indirect factory 3:2 2:3 1:1
overheads

Dr Manisha Bhavsar, HLCC 5