Cost Accounting Process Costing

P rocess Costing

Process is a distinct stage in manufacturing or production wherein Raw

Material is converted from one form into another form before it is finally
converted into the saleable final product. The following costs are ascertained for
each process:
a) Materials
b) Labour
c) Direct expenses
d) Production overheads
Administration and selling overheads are not considered since they are not related
to production process.

Process Costing is a method of costing whereby costs are charged to processes or

operations and averaged over units produced. This method is useful in the
manufacturing of products like steel, soap, chemicals, rubber, paints, oil, etc.
where for these products the production process is continuous and the output
from one process becomes input for the following process till completion.
a) The plant / factory is divided into number of processes, cost centers or
departments. Each sub-division is a stage of production / process.
b) Manufacturing activity is carried on continuously by means of one or more
processes run sequentially, selectively or parallelly.
c) The end product is usually a homogeneous (similar) unit not
distinguishable from one another.
d) Cost center is the process itself while cost unit is the output of the
process.
e) Separate account is prepared for each process to ascertain the cost
thereof.

FORMAT OF PROCESS ACCOUNT

PROCESS ____ ACCOUNT
Particulars Qty. ` Particulars Qty. `
To Direct Materials X X By Normal Loss @ X X
Introduced Scrap Value
To Other Materials - X By Output X X
Transferred to Next
Process @ CPU
To Labour Charges - X
To Direct Expenses - X By Abnormal Loss X X

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Cost Accounting TYBAF Sem V
To Factory / - X
Production
Overheads
To Abnormal Gain X X
TOTAL X X TOTAL X X
Working Note 1 – Quantity Reco Working Note 2 – CPU
Input in Process X Gross Cost (Total Debit Side)
(-) Normal Loss % (X) (-) Scrap Value
Normal / Expected Output X Net Cost
Actual Output X (÷) Normal / Expected Output
Abnormal Loss / Gain X Effective Cost per unit / Good
Unit Rate

Input Input means the basic raw material which is introduced in the
first process and which will be carried forward to next processes
for further processing.
Output It is the quantity which is ready from one process to be
transferred to another process. Output of first process shall
become input for next processes till completion.
Output shall be valued at Effective Cost Per Unit.
PROCESS LOSS All materials put into process are not likely to be good saleable
products. Some Loss, Scrap or Wastage is inevitable in Process
Industries. The Process Loss can be Calculated as Follows:
Input Units – Output Units.
Process Loss can be further divided into Normal Loss and Abnormal
Loss.
Normal Loss It is the loss of material due to inherent nature and unavoidable
reasons. It can be anticipated based on the nature of material,
nature of operation, past experience or technical data.
Normal loss can be calculated in any of the following ways:
(a) Based on Input – Input Quantity x NL %
(b) Based on Output – [Opening WIP + Fresh Units – Closing WIP] x
NL %
Normal Loss shall be valued at Scarp Value.
Abnormal Loss It is the loss in excess of pre-determined loss i.e. normal loss. It
occurs due to avoidable reasons and cannot be anticipated such
as carelessness of workers, bad plant design, bad operation design,
etc.
Abnormal Loss shall be valued at Effective Cost per unit. (deemed
good production)
Abnormal It is the unexpected gain in production under normal conditions.
Gain Abnormal gain arises when the Actual Production is more than the

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Cost Accounting Process Costing
Expected Production or the Actual Loss is less than the Normal /
Expected Loss
Abnormal Gain shall be valued at Effective Cost per unit.

FORMAT OF NORMAL LOSS, ABNORMAL LOSS & ABNORMAL GAIN ACCOUNT

Normal Loss Account
Particulars Qty. ` Particulars Qty. `
To Process Account X X By Bank A/c (Scrap) X X
By Abnormal Gain X X
A/c
If there is abnormal gain account, the difference shall be transferred to
abnormal gain account since abnormal gain will reduce the normal loss to a
certain extent.
TOTAL X X TOTAL X X

Abnormal Loss Account

Particulars Qty. ` Particulars Qty. `
To Process Account X X By Bank A/c (Scrap) X X
@ CP
By Costing Profit & Loss
A/c
Any difference shall be transferred to Costing Profit & Loss Account
TOTAL X X TOTAL X X

Abnormal Gain Account

Particulars Qty. ` Particulars Qty. `
To Normal Loss A/c @ X X By Process A/c @ X X
Scrap Value CP
To Costing Profit & Loss
A/c
Any difference shall be transferred to Costing Profit and Loss Account.
TOTAL X X TOTAL X X

The above treatment for process loss shall be followed when the scrap value is
identifiable to a particular process and the value if significant.

Output Transferred to Process Stock Account:

In some cases, the output of one process is not directly transferred to the next
process which was the case up till now. The output obtained from the Process
shall be first transferred to a Process Stock A/c and then from Process Stock A/c
to Next Process A/c. This is normally done where the Processes are carried out at
different locations of workshops and it helps in control of stocks. An additional
Process Stock will be prepared after each process.

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Cost Accounting TYBAF Sem V

PARTICULARS QTY. ` PARTICULARS QTY. `

To Balance b/d X X By Next Process X X
(Opening Stock) A/c
To Output X X By Balance c/d X X
Transferred from (Closing Stock)
Process A/c
TOTAL X X TOTAL X X

PROCESS STOCK ACCOUNT

Output Transferred Partly to Next Process and Partly to Warehouse:

In some cases, a process may give rise to an intermediary product which can be
sold without further processing in the market. For example, a company engaged
in manufacturing of cloth and shirts, can either process the cloth for making a
shirt or can also sell the cloth piece as it is in the market. In such cases, part
output is transferred to next process for further processing and part output is
sold from warehouse.
The balancing figure in the Stock Account shall represent the cost of goods sold and
this amount is to be transferred to the debit of Costing Profit & Loss A/c.

JOINT PRODUCTS:
When two or more products of equal importance are simultaneously produced
from a single process or a set of similar processes, they are known as Joint
Products. The quantity and sales value of each joint product is such that none of
them can be termed as a minor product hence all the Joint Products are major
products.
Joint Products represents two or more products separated in the course of same
processing operation, usually requiring further processing, each product being in
such a proportion that no single product can be designated as a major product.
The objective here is to produce all the Joint Products.
For example, in refining crude oil, Petrol (Gasoline), Kerosene (Jet Fuel), Diesel Fuel,
Heavy Fuel Oil, Waxes and Lubricants, Propane & Butane (LPG), and Asphalt (used
for making roads), are obtained and all of these are called Joint Products since
there is a same operation for all i.e. Distillation.

An increase in the output of one product will bring an increase in the quantity for
others but not necessarily in the same proportion. At the same phase of
production, two or more separately identifiable products will result from the joint
production process and this point is known as Split-Off Point.
Spilt-Off Point or Point of Production is where the common raw materials get
split and identified into two or more Finished Products.

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Cost Accounting Process Costing
Common Costs These are generally incurred for all products and hence are to
/ Joint Costs be apportioned to the product. These are also known as pre-
separation costs or pre-split-off point costs.
They normally consist of Direct Materials, Direct Labour,
Direct Expenses, Production OH.
They cannot be directly attributable to the product and hence
are supposed to be apportioned among the products on a suitable
basis.
Specific Costs These are post separation costs also known as further
processing costs and are specifically identified for each
product.
They normally consist of Further Processing Cost or Selling &
Distribution Overheads.

METHODS OF APPORTIONMENT OF JOINT COSTS TO JOINT PRODUCTS

Method 1: Physical Quantity Method

Method 2: Average Unit Cost Method
Method 3: Survey / Technical Evaluation / Points Method
Method 4: Contribution Margin Method
Method 5: Market Value Method:
(a) Market Value @ Split Off Point
(b) Market Value after Further Processing
(c) Net Realizable Value @ Split Off Point.

BY PRODUCTS:
The term by-product is often used synonymously with the term minor products.
It refers to those multiple products that have an insignificant sales value as
compared to those of major products. By-products are those products that result
incidentally from the manufacturing of main product. Processing of such by-
products is not the objective.
By-products are recovered from the materials discarded in the main process. It is
a secondary or subsidiary product incidentally arising during the manufacturing
process.

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For example, Molasses obtained in crystallization process of sugar manufacturing
is a by-product since production of sugar is the main objective and not the
molasses.
Glycerine recovered from Saponification Process of Soap Manufacturing.
Treatment of By-Products:
(1) Treated as Normal Loss:
The NRV of By-Product is credited / reduced from Joint Costs.
a. By-Product is salable at Split off Point, then consider Market Value at split
off point.
b. By-Product is not salable at spilt off point, since it required further
processing, then consider NRV.
NRV = Sales Value after processing (-) Profit Margin (-) S & D OH (-) Further
Processing Costs.

(2) Treat as Main Product:

The net joint cost is ascertained without reducing the by-product realization
and it is apportioned into JP & BP using the methods discussed above.
Joint Products By-Products
1. Two or more products separated in the Products recovered from the
course of same manufacturing process. materials discarded in a main
process.
2. Intentionally manufactured. Incidentally manufactured.
3. Higher Sales Value as compared to By- Lower Sales Value as compared to
Products. Joint Product.

Joint Products Co-Products

1 Joint products are produced from same Co-products arise from different
process or operation. processes or operations but belong
to same line of activity.
2 Joint products are produced from Co-products may arise from either
Common Raw Materials only. Common Raw Materials (Wood
used for Table, Chairs,) or Different
Raw Materials.

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Cost Accounting Process Costing
Q.1 Product A is manufactured after it passes through three distinct processes.
The following information is obtained from the record of a company for the year
ended 31st December, 2013:
Particulars Process I Process II Process III
Rs. Rs. Rs.
Direct Material 2,500 2,000 3,000
Direct Wages 2,000 3,000 4,000
Product overheads are Rs. 9,000. 1000 units at Rs. 5 each were introduced to
process I. there was no stock of materials or work in progress at the beginning
and at the end of the year. The output of each process passes direct to the next
process and finally to the finished stock A/c. Production overheads are recovered
on 100% of direct wages. The following additional data is available.
Particulars Output Percentage of Value of
during the normal loss to input scrap per
week unit(Rs.)
Process I 950 5% 3
Process II 840 10% 5
Process III 750 15% 5
Prepare Process Cost Accounts and Abnormal Gain or Loss Accounts for the year
ended 31st December, 2013.

Q.2 The product of a company passes through three distinct processes to

completion. These processes are known as X, Y, and Z from the past experience, it
is ascertained that wastage is included in each process as under: Process X -2%,
process Y- 4%, process Z- 10%.
The wastage at each process possesses scrap value. The wastage of processes X
and Y is sold at Rs.2.50 per unit, and that of process Z at Rs. 5.00 per unit. The
output of each process passes immediately to the next process and finished units
are transferred from process Z into stock. The following information is obtained.
Particulars X Y Z
Rs. Rs. Rs.
Material 2,70,000 2,60,000 1,20,000
Wages 4,30,000 2,40,000 1,30,000
Direct Expenses 1,37,500 1,45,000 1,80,000
50,000 units were put in process at a cost of Rs.10 per unit. The output of each
process is as follows:
Process X: 48,750 units, Process Y: 47,500 units, Process Z: 42,000 units.
There is no stock of work in progress in any process. Prepare the process accounts,
abnormal gain account and abnormal loss account.

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Cost Accounting TYBAF Sem V
Q.3 A product of a manufacturing concern passes through two processes viz. A
and B and then to finished stock. The following figures have been taken from its
books for the year ended 31st March, 2013.
Particulars Process A Process B
Raw Material introduced in process (units) 10,000 700
Cost of raw Materials introduced (per unit) (Rs) 125 200
Wage (Rs) 2,80,000 1,00,000
Machine Expenses (Rs) 20,000 10,000
Direct Expenses (Rs) 10,000 10,000
Other Factory Expenses (Rs) 45,000 22,500
Indirect Material (Rs) 5,000 10,000
Normal loss in weight 5% 5%
(% on total units introduced in each process)
Normal Scrap (% on total units introduced in 10% 10%
each process)
Realisable value of scrap (per 10 units) 800 2,000
Output (units) 8,300 7,800
Prepare Process Accounts, Abnormal Loss and Abnormal Gain Account.

Q.4 The product of a company passes through three direct processes, called
respectively A, B and C. From the experience, it is ascertained that wastage
incurred in each process is as under:
Process A 2%; Process B 5%; Process C 20%.
The percentage of wastage is computed on the number of units entering the
process concerned.
The wastage of each process possesses a scrap value.
The wastage of processes A and B is sold at Rs.50 per 100 units and that of process
C at Rs 0.75 per unit.
Following information was obtained for the month of March, 2014:
20,000 units of crude materials were introduced in process ‘A’ at the cost of Rs.
8,000.
Particulars Process A Process B Process C
Rs. Rs. Rs.
Material consumed 4,000 1,500 1,000
Direct Labour 6,000 4,000 3,000
Manufacturing expenses 1,800 3,500 1,000
Output in units 19,500 21,000 15,900
Finished Product Stock
1st March 2014 2000 3,000 5,000
31st March 2014 1,500 4,000 ?
Stock valuation on 1st March 2014; Rs 1, Rs 1.50, Rs 2.00 respectively in process A,
B and C. Stocks on 31st March, are to be valued as per valuation as on 1st March

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Cost Accounting Process Costing
2014. Draw process accounts A, B and C and process stock accounts of process A,
B and C.

Q.5 M.U. Industries Ltd. is manufacturing a product which passes through three
consecutive processes. F-Yarn, S-Yarn and T-Yarn Process. The following figures
have been taken from their books for the year 31st March, 2014.
Particulars F-Yarn S-Yarn T-Yarn
Process Process Process
Quantitative Details:
Basic input @ 300 per unit 9,000 -- --
Output during the month 8,000 6,000 5,000
% of normal waste 10% 25% 15%
Process Stock-opening 300 500 100
Process Stock-closing 500 300 400
Monetary Information:
Rs. Rs. Rs.
Process Material 4,20,000 6,60,000 8,73,000
Wages 2,67,000 3,73,500 3,11,100
Manufacturing Overheads 2,40,000 2,53,500 2,41,900

Value of Opening Stock per unit 420 680 900

Scrap value per unit 250 300 400

Closing stock is to be valued at respective cost of each process (as per the
respective process accounts for the year ended 31st March, 2014).
You are required to prepare:
a. Process A/c.
b. Process stock A/c
c. Abnormal Loss A/c
d. Abnormal Gain A/c

Q.6 V.B Industries Ltd. is manufacturing a product which passes through three
consecutive processes i.e. Process P, Q, and R. The following figures have been
taken from their books for the year ended 31st March, 2014.
Particulars Process P Process Q Process R
No. of units produced 10,000 -- --
Rate per unit of units
introduced (Rs)
Output during the year (units) 400 -- --
Normal loss (% on units
introduced in each process) 8,500 7,500 6,500
Scrap value per unit(Rs)
Process stock 10% 20% 15%
Opening (units) 100 150 200

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Cost Accounting TYBAF Sem V
Closing (units) 1,500 2,000 1,500
Value Of opening stock per 1,000 1,500 1,000
unit(Rs) 550 850 1,200
Process Material(Rs)
Wages(Rs) 8,00,000 7,27,000 9,42,000
Manufacturing Overheads(Rs) 3,25,000 3,75,000 4,09,000
2,85,000 3,25,000 2,13,000
Closing stock is to be valued are respective cost of each process. You are required
to Prepare:
1) Process A/c.
2) Process stock A/c
3) Abnormal Loss A/c
4) Abnormal Gain A/c.
5) Normal Loss A/c.

Q.7 Wasan Industries Ltd. manufactures a product which passes through three
consecutive processes viz: Process A, B and C. the following figures have been
taken from its books for the year ended 31st March, 2014:
Particulars A B C
Number of Units Introduced --
Of Raw Materials (units) 40,000 -- --
Rate per unit of Raw Material -- --
introduced (Rs) 80
Output during the year (units) 36,000 31,000 28,200
Process Stock:
As on 31st March, 2014 (units) 3,000 6,000 3,200
As on 31st March, 2013 (units) 7,000 8,000 5,000
Value of Opening Stock per unit
(Rs) 112 172 240
Indirect Material (Rs) 5,20,000 4,96,000 6,54,000
Direct Wages (Rs) 3,80,000 3,40,000 4,10,000
Manufacturing Overheads (Rs) 2,28,000 3,26,000 2,55,250
Normal Loss (% of units
introduced in the process) 10% 20% 15%
Scrap value per unit (Rs) 20 30 40
Closing Stock of each process is valued at cost of concerned process. Prepare
Process Account and Process Stock Accounts.

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Cost Accounting Process Costing
Q.8 The following details for the year ended 31st December, 2013 are available from
the books of a trader having three workshops and a wholesale warehouse.
Particulars Workshop A Workshop B Workshop C
Raw Material used (Tonnes) 250 152 145
Cost per tonne (Rs) 600 400 250
Direct Wages (Rs) 4,29,000 1,01,250 52,800
Direct Expenses (Rs) 69,000 88,350 13,450
Loss of Tonne due to
Processing 4% 5% 2.5%
Proportion of production
transferred
To workshop B at cost 20% 50% 100%
To workshop C at cost 80% 50%
Proportion of production
transferred 2,500 10,000 20,000
To wholesale warehouse
Wholesale warehouse:
Stock on 1-1-2013 at cost 10 20
Stock on 31-3-2013 in tonne
Sale were Rs. 20,00,000, Salaries Rs. 2,00,000 and Administrative expenses Rs.
1,00,000. Prepare the respective workshop A/c showing the cost per tonne each
workshop and an account showing the net profit of the firm for the year 2013.
Closing stock in warehouse to be valued at the cost per ton in each workshop.

Q.9 M/s Arun Enterprises Ltd. Provides you the following information for the month
of December, 2013 about processes X, Y, and Z.
Particulars Process D Process C Process H
Raw material introduced in the process 20,000 3,480 2,875
(units)
Cost of raw material per unit (Rs) 12 15 18
Direct Expenses 1,12,250 79,220 72,770
Labour charges (Rs) 86,800 85,480 58,330
Factory Overhead (Rs) 25,750 28,620 39,650
Normal Loss (% on total number of
units input) (%) 4% 5% 6%
Scrap Value per unit (Rs) 5 12 15
Output transferred to next process (%) 60% 50% --
Output sold at the end of process (%) 40% 50% 100%
Selling price per unit of the output sold
at the end of process (Rs) 30 35 55
You are required to prepare process X, Y, and Z Accounts indicating clearly Profit
& Loss in each process and costing Profit & Loss Account.

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Q.10 Unique Ltd. Provides you the following information for the month of March,
2014 about its process X, Y, and Z.
Particulars Process X Process Y Process Z
Basic Raw material introduced 20,000 4,420 3,740
(units)
Cost of basic raw material per 24 28 32
unit (Rs)
Labour charges (Rs) 3,43,500 2,93,700 2,44,800
Sundry Materials(Rs) 1,55,700 1,00,160 89,480
Factory Overhead (Rs) 40% of 40% of 40% of
basic Raw labour labour
Material Charges charges
Normal Loss (% on total number 3% 5% 7%
of units input)
Scrap Value per unit (Rs) 12 15 21
Output transferred to next 70% 60% --
process (%)
Output sold at the end of process 30% 40% 100%
(%)
Selling price per unit of the output 65 88 110
sold (Rs)
Prepare process Accounts.

Q.11 Raj Manufacturing Co. supplies you the following information for the year
ended 31st March, 2013.
Particulars Process I Process II Process III
Raw material introduced in the process 12,000 2,440 2,536
(units)
Cost of raw material per unit (Rs) 5 5 5
Labour (Rs) 17,000 12,000 7,500
Machine Overhead (Rs) 50% of 50% of 50% of
labour labour Labour
Sundry material (Rs) 12,700 14,000 8,820
Other Manufacturing Expenses 1,160 3,628 22,488
Normal Loss (% on number of units
entering the process having no 4% 5% 6%
realisable value)
Wastage ((% on number of units 6% 5% 4%
entering into the process having Scrap
value)
Scrap Value per unit of wastage (Rs) 3 4 5
Output transferred to next process 60% 50% --
Output sold at the end of process 40% 50% 100%

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Cost Accounting Process Costing
Selling price per unit of the output sold Rs.11 Rs.13 Rs.16
at the end of process
Prepare process Account.

Q.12 In an oil refinery, the product passes through three different processes, viz.
crushing, refining and finishing. The following information is available for the
month of March 2014:

Particulars Crushing Refining Finishing

Process Process Process
Rs. Rs. Rs.
Raw Materials (500 tons Copra) 9,00,000 -- --
Wages 32,000 23,600 23,500
Power 4,800 4,000 6,000
Sundry Materials 2,000 7,600 --
Factory Expenses 2,400 4,000 3,800
200 tons of oil cake was sold for Rs. 60,000 and 275 tons of crude oil was obtained
from crushing process.
25 tons of by-product of the crushing process fetched Rs. 3,600.
25 tons of by-product of the refining process was sold for Rs. 3,600 and 250 tons
of refined oil was obtained.
10 tons of finished oil were sold for Rs. 4,800 and 240 tons of finished oil was
stored in drums.
The establishment expenses for the month amounted to Rs. 14,000 which is to be
charged to the three processes in proportion of 3:2:3.
The cost of drums for storing finished oil was Rs. 84,100.
Prepare accounts for all the three processes.

Q.13 M/s Rajgad Production Co. Ltd. manufacture one item which is produced in
three stages i.e. A, B and C. From past experiences the company has ascertained
that the normal loss in each process is as follow:
Process A 5%
Process B 10%
Process C 15%
During the month of January 2013 production was started with 20,000 units of
raw material costing Rs.10 per unit.
The following are the details for the month:
Particulars Process A Process B Process C
Indirect Material (Rs) 20,500 76,250 22,000
Electricity Expenses (Rs) 6,250 12,500 10,750
Labour Charges (Rs) 35,000 63,000 48,500
Overheads (Rs) 33,250 64,250 53,750
Output (units) 19,000 15,000 10,000

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Output sold (units) 3,000 3,000 3,000
Sale price of output (per unit) 20 35 50
(Rs)
Sale price of units Lost (per 10 15 20
unit) (Rs)
You are required to prepare process A, B and C Cost A/c indicating clearly the net
profit/loss on units sold for each process.

Q.14 In the timber industry, the milling operation upto split-off point during a
period amounted to Rs. 72,000 with the following production:
First grade timber 3,000 units
Second grade timber 6,000 units
Third Grade timber 3,000 units
You are required to apportion the Joint Cost:
a) On average unit cost method.
b) On technical evaluation with points 4, 3, and 2 for first, second and third
Grade respectively.

Q.15 In a manufacturing company 10,000 kilolitres of ‘A’ is processed to processes

to produce 6,000 kilolitres of ‘B’ and 4,000 kilolitres of ‘C’ the joint cost before
separation point came to an amount of Rs. 24,000. from the following, calculate
the apportionment of joint cost and the profit of each product under (a) physical
measurement, (b)market value at separation point, and (c) market value after
further processing, or market value at finished stage.
B C
(Rs) (Rs)
Unit selling price at separation point 5.00 3.75
Unit selling price after further processing 7.00 7.50
Further processing costs after separation 5,000 7,500

Q.16 A Ltd. manufactures three joint products A, B and C. the joint manufacturing
expenses were Rs. 8,000. It was estimated that the profit on each product as a
percentage of sales would be 30%, 25% and 15% respectively. Subsequent expenses
were as follows:
A B C
(Rs) (Rs) (Rs)
Materials 100 75 25
Direct wages 200 125 50
Overheads 150 1 75
25
450 325 150
Sales 6,000 4,000 2,500

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Cost Accounting Process Costing
Prepare a statement showing apportionment of the joint expenses of
manufacture over different products.

Q.17 A Product passes through the three processes. The following cost data have
been extracted from the books of a manufacturing company.
Particulars Total Process I Process II Process III
Rs. Rs. Rs.
Direct Material 1,50,840 52,000 39,600 59,200
Direct Wages 1,80,000 40,000 60,000 80,000
Production Overhead 1,80,000 -- -- --
10,000 units at Rs.6/- each were introduced into process I. There was no stock of
material or work-in-progress at the beginning or at the end. The output of each
process passes directly to the next process and finally to the finished stock.
Production overhead is recovered at 100% of Direct wages.
The following additional data are obtained:
Particulars Output during Percentage of Value of
the week normal loss to scrap per
input unit(Rs.)
I 9,500 5% 4
II 8,400 10% 8
III 7,500 15% 10
Prepare Process Accounts and Abnormal Loss Account/Gain Account and Normal
Loss Account.

Q.18 Savita Chemical Ltd. is manufacturing a product which passes through three
consecutive processes. Process X, Process Y, Process Z. The following figures have
been taken from its books for the month ended 31st January, 2015.
Particulars Process X Process Y Process Z
Quantitative Information:
Basic raw material at Rs 10 25,000 kgs -- --
per kg
Output during the month 24,000 23,000 22,250
(kgs)
Other Additional Information:
Process Material (Rs) 1,50,000 2,70,000 3,50,000
Direct Wages 80% of 70% of 60%of
process process process
Materials Materials Materials
Indirect Material (Rs) 10,000 8,000 2,000
Indirect wages (Rs) 2,000 980 1,620
Machine Overheads (Rs) 10,000 8,000 12,000
Other factory overheads 80% of direct 90% of direct 75% of direct
Wages Wages Wages
Normal Loss (% on input) 2% 4% 4%
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Cost Accounting TYBAF Sem V
Scrap value per kg(Rs) 2 3 5
You are required to prepare process Account.

Q.19 Abad Chemical Co. Ltd. Produced three types of chemicals during the month
of March, 2014 by three consecutive processes. In each Process 2% of the total
weight put in is lost and 10% is scrap. Scrap of Process I and Process II realise Rs
100 a ton and that of process III Rs.20 a ton. The Products of the processes are
dealt with as follows:
Particulars I II III
Passed on the next process 75% 50% --
Sent to warehouse for sale 25% 50% 100%
Details of cost:
Raw Materials used: Tonnes 1,000 140 1,348
Rs. 1,20,000 28,000 1,07,840
Direct Wages 20,500 18,520 25,000
General Expenses 10,300 7,240 4,320
Prepare Process Cost Accounts showing cost per ton of each process.

Q.20 Reliable Yam Ltd. manufacture a yam product. The product passes through
three consecutive processes F.Y., S.Y., and T.Y. Relevant details for the month of
March, 2014 are as under:
Particulars F.Y S.Y T.Y
Process Process Process
Quantitative Information in
kilograms:
Basic input kilograms @ Rs.10 per 2,000 -- --
kilogram
Output during the month 1,950 1,925 1,679
Stock of process
- On 1st March,2014 200 300 100
- On 31st March, 2014 150 400 59
Percentage of normal Loss to input in 2% 5% 8%
process
Monetary Information: Rs. Rs. Rs.
Process Material 9,000 2,100 2,716
Wages 9,064 1,860 4,000
Value of Opening Stock 3,880 6,720 2,800
Scrap value per kilogram Rs 1 Rs.2 Rs.4
Closing Stock is to be valued at the respective cost of each process.
Prepare Process Accounts, Process Stock Accounts, Abnormal loss and Abnormal
Gain Account.
Find out the costing profit, when the sales out of T.Y. process stock are made at
Rs 40 per kilogram.

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