Example 1

The following data relates to Process 1.

Materials input 1,000 units costing $10,000
Labour costs $8,000
Departmental overheads $6,000
Normal loss is 4% of input and is sold as scrap for $12 per unit.
Required:
Calculate the average cost per unit in Process 1 and complete the process account and the scrap
account.

Example 2
The following data relates to Process 1.
Materials input 1,000 units costing $10,000
Labour costs $8,000
Departmental overheads $6,000
Normal loss is 4% of input and is sold as scrap for $12 per unit.
Actual output = 944 units
Required:
Calculate the average cost per unit in Process 1 and complete the process account, abnormal gains
and losses account and the scrap account.

Example 3
W&B Ltd produce a breakfast cereal that involves several processes. At each stage in the process,
ingredients are added, until the final stage of production when the cereal is boxed up ready to be sold.
In Process 2, W&B Ltd have initiated a quality control inspection. This inspection takes place
BEFORE any new ingredients are added in to Process 2. The inspection is expected to yield a normal
loss of 5% of the input from Process 1. These losses are sold as animal fodder for $1 per kg.
The following information is for Process 2 for the period just ended:
Units $
Transfer from Process 1 500 kg 750
Material added in Process 2 300 kg 300
Labour 200 hrs 800
Overheads - 500
Actual output 755 kg –

Prepare the process account, abnormal loss and gain account, and scrap account for Process 2 for the
period just ended.

Example 4: Equivalent units

For Process 1 in LJK Ltd the following is relevant for the latest period:
Material costs 500 units @ $8 per unit
Labour $2,112
Overheads 150% of labour cost
Output: 400 fully worked units, transferred to Process 2. 100 units only 40% complete with
respect to conversion, but 100% complete with respect to materials

There were no process losses.

Required:
Complete the process Account

Example 5
A firm operates a process costing system. Details of Process 2 for Period 1 are as follows.
During the period 8,250 units were received from the previous process at a value of $453,750, labour
and overheads were $350,060 and material introduced was $24,750.

At the end of the period the closing WIP was 1,600 units which were 100% complete in respect of
materials, and 60% complete in respect of labour and overheads. The balance of units was transferred
to Finished goods.

There was no opening WIP.

Calculate the cost per EU, the value of finished goods and closing WIP.