decurnentsamy/cosumentsontiact process problenantm @ A product passes through 2 processes A & B prepare the Process A/c’s Geto Gn) 10000 units introduced at cost Rs Material Consumed 24000 Direct labour 28000 Manufacturing exp 8000 Normal wastages on input 5% Scrap value of normal wastage 40 (Rs. 100 per units) 12000 16000 8566 10% 50 ‘Aso prepare Abnorhal wastage’ effectives alc’ as the case may bewth each To cost of Input To materials To direct labour To process A alc To materials To direct labour To manufacturing exp To Abnormal effectives 10000 40 Process A alc 20000 By normal loss alc 24000 By Abnormal wastage alc 28000 By process b Alc Process B alc 78980 By Normal Loss 12000 By finished stock alc 116000 8566 544, Calculation of cost per unit for process A alc: 100 ‘9400 200 78960 470Total input qty ~ Normal loss Units = 80000 - 200 = 79800 = 8.40_ 10000500 9500 Cost of Abnormal Wastage = 100 x 8.40 = 840 Process B Cost per unit= Total Cost - Scrap value of normal loss units Total input qty — Normal loss Units = 115526 —470 = 115056 = 13,60_ 9400 - 940, 8460 Cost of Abnormal Wastage = 40 x 13,60 = 544 preparation of Normal & Abnormal Loss A/e During a month, 2,000 units were introduced into Process I. The normal loss was estimatect ‘at 5% on input. At the end of the month 1,400 units had been produced and transferred to next process, 460 units were uncompleted and 140 units had been scrapped. It was ‘estimated that uncompleted units had reached a stage in procluction as follows: Material 75% completed Labou 50% completed Overheads 50% completed ‘The cost of 2,000 units introduced was %5 800. Direct materials introduced during the process amounted to €1440. Production overheads incurreds were €1,570. Direct labour 83340. Units scrapped realized 21 each. ‘The units scrapped have passed through the process, so were 101 regards material, bour and overheads. You are requited to: (a) prepare a Statement of Equivalent Production; (b) evaluate the cost of abnormal loss, finished goods and closing stock: and (¢) prepare the Process | Account and Abnormal Loss Account. UICWA Inter, Adapted) rompleted as Solution:Solution: Statement of Equivalent Production Tipit Output Exelon wre Units Units [atria labour Overeads ay el oy eT Oy e 22000 | Nona loss mw] —- -| -— -| - — Abnormal lose aw] 4 wo] 4 10! 40 1 Finished production | 1400 | 1400 100 | 1400 100 | 1400 100 Workinprogess | a0 | 35 75] 290 © 50 | 2500 "2000 | otal 200 Equivalent Production 1785 1670 1670 ‘Toth manulecksng expamaes 7500) Re MEE Fa 1070 ‘Wasp es (par st pu th prec . © 20 ‘Scrap (Fale pros He 50 poe cane] jeerect ca x an ue ore oat Ee = 0 0Precane Jone ard ty poset Casting vas Meese RARE TRE TSO ae Seine Coser ie SOON Ticthink of Pe onto paces Hard ete bul of the AUER cf CmceRE IES Masten! 961 me MEME CER and He alan = SS Tse crnin erm of cs i i rst Roa ena are oe Anort rmane to Sm oase Oy sas i neon ren Less wanagerant aapanaes re selog socaee Sean cd eet ot waa Nowe: Wack bet ao we ao 90 mute meme wo be earl Han Inter Process Profius “The manson of the cunout of one nemcens i another wan ether be atthe eit eat he mech ead fc. Ti nd Dre rcpt mc fra fs eens Imo ee eA eflekoact ofore ciecee & ane! 20 Dye kent The wagkct once hase onerowwet tha WeLuhese Tike oficank of prance era cam i Kalas b+ crampaacig Oke vale uN Af a Dee feeb the pcs ach men be cml Ee a etm easel fre she rah HE armanck Har ies dir ceoeere teainas a sear” are lfciems. oevene?. @ the omaiker ice 1 hits,Process Costing a7 Statements of Cost Element oeost Cont Equivalent Cast per ? production it ‘wits 7 iw @ (asB) ‘Matera Units introduced 530 Direct materials 1410 7240 Less Scrap value of loss (norma 100 Moterial cost 740 1785 4 Diner! labour 340 1am 2 Overheads 1470 1570 1 Total Tso Zz Statement of Evaluation Particulars Elenestof | Equictent ] Cont per Cot] Tolaleat cot | production | unit @ z z ‘Abnormal tow | Material 0 2 160 Labour 0 2 30 Overhcads * 1 0 230 Finished Material 1400 4 500 Production Labo 1400 2 2300 Owriwads | 100 1 1400 280 Workinprogress: | Material 35 4 1380 Labour 0 2 “60 ‘Overheads 0 1 20 2070 — | 20 Process I Account Particulars Unite [__© | Particulars tints | ToUnitsintreduced | 2000 | 5800 | By Normal ks 100 | 100 ‘To Direct material 10 | By Abnormal loss 40 | 280 To Dinu wages 3340 | By Finished production “To Production overheads 11670 | “wansferred to Process it) 1400 | 9800 By Balance e/d (Gworkcinprogrese) 460 | 2070 2000 | 12250 200 | 12250 Abnormal Loss Account Partciare Unite] ¢ | Parts Unis = ToPrxest 3 | 230 | Bysatcofarap 90 0 By Costing P&L Ave 240 | 20 ao] 240Aiustravion 33: texting Ui, fn meal pss throug four Processes UAL and 1 sn te output ef each process 4 te input of the subecqeatproseses. The oss the four processes I Tl and IV are respectively 25%, 20%, 20% and 16-23% of the input. Irthe end product atthe end af Process IV 8 40,000 hg, what i the guna iP reqied oe (ed at the Bginning of Process Land the sost of same at % 5 per kg Also find out the effect off increase or decrease int the ‘cast of the er! product for variation of every in the cost of fa [CA doter} Solution: Suppose the quantity of faw material put in Process I is 100 kg, The output and input it the four processes will be the following Process I Process I Process if] Process IV Input (ke) 100 78 # 48 Less (kg) 25 5 2 8 Output 8 Oy a8 40 This end oupt is 40% ofthe inp Proves |W output of Process TV i 40,000 kg, the input Process I will be 40,000 ~ 100/40 » 1,00,000 kg or for I kg of outpyt 2.5 ke of materials is required. If cost of material increases or decreases by Re. 1, the effect on output would decrease or increase by & 2.50 per ke.