COST ACCOUNTING UNIT V METHODS OF COSTING

PART B

1. In a process A 100 units of Raw materials were introduced at a cost of

Rs.1,000. The other expenditure incurred by the process was Rs.602. Of
the units introduced 10% are normally lost in the course of manufacture
and they possess a scrap value of Rs.3 each. The output of process A was
only 75 units. Prepare process A Account and abnormal loss account.

2. From the following information, calculate kilometers and total passenger

kilometers. Number of buses 4, days operated in a month 30, trip made by
each bus 4, distance of route 30 kilometers long (one way); capacity of
the bus 60 passengers; Normal passengers traveling 80% of the capacity.

3. Mr. Kumar owns ten taxi car and the following information is available
from the records maintained by him.
Number of taxi car – 10 ; Cost of each car – Rs.54,600
Manager Salary – Rs.700 p.m.; Accountant salary – Rs.500 p.m.
Cleaner Salary – Rs.200 p.m.; Mechanic Salary – Rs.400 p.m.
Garage rent – Rs.600 p.m.; Insurance Premium – 5% p.a.
Annual Tax – Rs.900 per car; Driver’s Salary – Rs.350 p.m. per car
Annual Repairs – Rs.1,000 per car
Total life of a taxi car is about 2,00,000 kms. A tax car runs, in all, 3000
kms in a moth and 30% of this distance has to be run without any
passenger. Petrol consumption is one litre for every 10 kms 4.41 per litre.
Oil and other sundries are Rs.10.50 per 100 kms. Calculate the cost of
running a taxi car per k.m.

4. Mr. Sakthi owns a fleet of taxies and the following information is

available from the records maintained by him:
Number of Taxies 10 Garage Rent Rs.600 p.m.
Cost of each Taxi Rs.54,600 Insurance Premium 5% p.a.
Salary of Manager Rs.700 p.m. Annual Tax Rs.900 per taxi
Salary of Accountant Rs.500 p.m. Driver’s Salary Rs.350 p.m. per taxi
Salary of Cleaner Rs.200 p.m. Annual Repairs Rs.1000 per taxi
Salary of Mechanics Rs.400 p.m.
Total life of a taxi is about 2,00,000 kms. A taxi runs, in all, in a month and
30% of this distance has to be3 run without any passenger. Petrol consumption
is one litre for every 10 kms @ Rs. 4.41 per litre. Oil and other sundries are
Rs.10.50 per 100 kms. Calculate the cost of running a taxi per km.
 5. From the following information, prepare Job No. 236 account in the Job
Cost Ledger:
Rs.
Direct materials purchased 3,600
Direct Material received from 25,200
stores
Direct Wages 14,400
Other direct expenses 1,500
The works overheads are to be taken at 75% of wages and administrative
overheads at 25% of work cost. The contract price of Job No. 236 which is
completed is fixed as Rs.82,500.

6. Calculate (a) Total kms covered in a month; (b) Total passenger kms.
Number of buses 10
Days operated in a month 25
Round trips made by each 4
bus
Distance of route 20 km long
Capacity of bus 60 persons
Normal passengers travelling 90% of capacity

7. From the following information, you are required to prepare process

account.
Material consumed 12,000
Direct Labour 14,000
Manufacturing expenses 4,000
Input in Process A (10,000 units) 10,000
Output (9,400 units) ---

PART C
8. Product X is obtained after passing through three distinct processes.
Prepare process accounts from the following particulars.
Process I Process II Process III
Materials 5,200 3,960 5,924
Direct Wages 4,000 6,000 8,000
Total production overhead Rs. 18,000
In process I, 1000 units were introduced for Rs.6,000. Production overhead to
be distributed at 100% on wages.
Process I Process II Process III
Actual output units 950 840 750
Normal loss 5% 10% 15%
Scrap value per unit 4 8 10
 9. A product passes through three Process X,Y and Z. Normal wastage in
each process and the scrap value of each unit are as follows:
Process Wastage Value of scrap per unit Rs.
X 3% 0.25
Y 5% 0.50
Z 8% 1.00
st
10,000 units were issued to Process X on 1 October 2005 at a cost of Rs.1.00
per unit. The other expenses were as follows:

Process
X Y Z
Rs. Rs. Rs.
Materials 1,000 1,500 500
Labour 5,000 8,000 6,500
Direct Expenses 1,050 1,188 2,009
Actual output (units) 9,500 9,100 8,100
Prepare: [a] Process Accounts and [b] Abnormal loss and abnormal gain
accounts.
10.A product passes through three processes T, U, V. 10,000 units at Re.1
per unit were issued to process T. The other details:
Process
Expenses T U V
Rs. Rs. Rs.
Sundry Materials 1,000 1,500 1,480
Direct Labour 5,000 8,000 6,500
Direct Expenses 1,050 1,188 1,605
The wastage of process T was 5%, U- 4% and V- 5% which were sold at
Re.0.25 per unit, Re.0.50 per unit and Re.1.00 per unit respectively. The
overhead charges were 168% of direct labour. The final product was sold at 10
per unit, fetching a profit of 20% on sale. Prepare process accounts and finished
goods account.

11.A product passes through three processes. During the month of January,
600 units have been produced. The data available from cost records are
Process I Process II Process III
Rs. Rs. Rs.
Raw Material 4,000 2,000 1,500
Wages 3,000 2,500 2,500
Direct expenses 600 200 500
Glass Jars -- 2,030 --
 Packages -- -- 325
Indirect expenses are Rs.1,600. By products from Process II are sold for
Rs.240, scrap from Process III is sold for Rs.125. Prepare Process Accounts.

12.The information given below is extracted from the cost accounts of a

factory producing commodity in the manufacture of which three
processes are involved. Prepare process cost account, showing the cost of
the output and the cost per unit at each stage of manufacture.
(a) The operations in each separate process are compiled daily.
(b) The value at which units are to be charged to Process B and C is the cost
per unit of Processes A and A plus B respectively.

Particulars Process A Process B Process C

Rs. Rs. Rs.
Direct Wages 640 1,200 2,925
Machine Expenses 360 300 360
Factory Overhead 200 225 240
Raw Materials Consumed 2,400 --- ---
Units Units Units
Production (Gross) 37,000 --- ---
Wastage 1,000 1,500 500
Opening Stock of Raw Materials --- 4,000 16,500
Closing Stock of Raw Materials --- 1,000 5,500

13.A product passes through two processes and then to finished stock. The
normal wastage of each process is as follows: Process A – 3% and
Process B – 5%\ The wastage of Process A was sold at Rs.5 per unit and
that of process B at Rs.10 per unit. 20,000 units were introduced into
process A at the beginning of January 2008 at a cost at Rs.40 per unit.

Process A Process B
Rs. Rs.
Sundry Materials 40,000 60,000
Wages 2,00,000 3,20,000
Manufacturing Expenses 30,000 28,500
The output of process A was 19,000 units and that of process B 18,200 units.
Prepare the Process Accounts.

14.A product passes through three distinct processes to completion. These

processes are numbered respectively I, II and III. During the week ended
 on 15th January 2001, 500 units are produced. The following information
is obtained.
Particulars Process I Process II Process III
Direct Materials 3,500 1,600 1,500
Direct Labour 2,500 2,000 2,500
The overhead expenses for the period were Rs.1400 apportioned to the process
on the basis of wages. No work-in-progress or process stocks estimated at the
beginning or at the end of the week. Prepare Process Account.

15.A Chemical “Exultant” passes through processes A and B before

completion. In process B, a by-product “Exalestant” is produced which
after further processing in process C, is sold at a profit of 16.67% of
selling price. You are required to prepare accounts for processes A, B
and C from the data given for the month of April 2002.
Process A Process B Process C
Particulars
Rs. Rs. Rs.
Output in units 12,600 11,400 300
Normal loss in process (% of input) 20 5 ---
ScrapValue 1.50 5 ---
Direct materials introduced (15,000 units) 1,12,500 --- ---
Direct materials added 30,000 12,810 300
Direct wages incurred at Rs.3 per hour 36,000 44,100 900
Production overheads for the month Rs.2,16,000 is absorbed by a labour hour
rate method.

16.A product passes through two distinct process, A and B and thereafter to
finished stock. From the following information, prepare process cost
accounts.
Particulars Process A Process B
Materials consumed Rs.12,000 Rs.6,000
Direct Labour Rs.14,000 Rs.8,000
Manufacturing expenses Rs.4,000 Rs.4,000
Input in Process A (units) 10,000 ---
Input in Process A (value) 10,000 ---
Output (units) 9,400 8,300
Normal wastage 5% 10%
Value of Normal Wastage per 100 units) Rs.8 Rs.10
 17.A product passes through three distinct processes to completion. These
processes are numbered respectively I, II and III. During the week ended
on 15th January 2001, 500 units are produced. The following information
is obtained.
Particulars Process I Process II Process III
Direct Materials 3,500 1,600 1,500
Direct Labour 2,500 2,000 2,500
The overhead expenses for the period were Rs.1,400 apportioned to the process
on the basis of wages. No work-in-progress or process stocks estimated at the
beginning or at the end of the week. Prepare Process Account.

18.In process A, 100 units of Raw materials were introduced at a cost of

Rs.1,000. The other expenditure incurred by the process was Rs.602. Of the
units introduced, 10% are normally lost in the course of manufacture and they
possess a scrap value of Rs.3 each. The output of process A was only 75 units.
Prepare process A Account and abnormal loss account.
In Process B, 75 units of a commodity were transferred from Process A at a cost
of Rs.1,310. The additional expenses incurred by the process were Rs.190. 20%
of the units entered are normally lost and sold @ Rs.4 per unit. The output of
the process was 70 units. Prepare Process B account and abnormal gain account.

19.A transport company is running 4 buses between two towns which are 50 kms
apart. Seating capacity of each bus is 40 passengers. The following particulars
were obtained from their books for April 2016. Wages of drivers Rs.2,500;
Salaries Rs.900; Diesel Rs.3,900; Repairs and Maintenance Rs.900; Insurance
Rs.1,500; Depreciation Rs.2,700; Interest and other charges Rs.2,000. Actual
passengers carried were 75% of the seating capacity. All the four buses ran on
all days of the month. Each bus made one round trip per day. Find out the cost
per passenger kilometer.

20.A product passes through two processes X and Y before it is finished and
transferred to stock. In both the processes 10% of the weight put in is lost. An
additional 20% is scrapped, which realizes Rs.10 per ton and Rs.15 per ton
respectively from processes X and Y. The following data is obtained for the
month of Nov. 2015.
Process I Process II
Materials consumed 1000 tons 100 tons
Rs. Rs.
Cost per ton of material 20 30
Wages 10,000 12,000
Works expenses 7,000 8,400
Prepare process accounts showing cost of the output of each process and cost
per ton.